Sandwiched between France and Spain, the Principality of Andorra is a remarkable, and tiny, independent nation that offers unique residency options. Subsequently, for individuals looking to lead a tax-effective, and European lifestyle, securing a Golden Visa for Andorra likely makes sense.
This brief guide will walk you through the various Residency in Andorra options, in 2022, and give you some resources on where to go for further assistance.
- An Introduction to the Country and Getting a Golden Visa for Andorra
- Andorra Tax Status
- What Residency Visa Options are Available
- How Do I Secure a Golden Visa for Andorra?
- Insurance Considerations
- Further Assistance & Key Resources
An Introduction to the Country and Getting a Golden Visa for Andorra
If you are anything like me the tax status of a nation has less to do with my enthusiasm for it as I get older. Over the years, what I have discovered is that you need to find a way to balance your desire to improve your tax structuring as well as your general lifestyle. Personally, that means great food, a safe environment, excellent wine, and temperate weather.
Andorra has this in abundance as a, historically, safe, and stable nation, in a co-principality between France and Spain, which has thrived since its inception in circa 803. The capital city, Andorra la vella, sports amazing vistas of mountains that, come winter, turn into a skier’s paradise. Simply walking through its winding streets leads you to many amazing dining establishments serving up fresh traditional, and modern Catalan-influenced cuisine at very reasonable prices (certainly by New Zealand standards!).
Moving Andorra further up my list of preferred golden visas is the fact that the tax and business regimes are operated in a commonsense manner. It is effectively a tax haven without the stigma, and requisite watch list status, to go with it.
Andorra Tax Status
In particular, the individual income tax rates are exceedingly reasonable and contain only 3 tax brackets which max out a top marginal rate of 10%. However, there are plenty of easy exemptions, depending on your residency class, that will be covered later in this article.
Corporate tax rates are also excellent under the Andorra tax regime. The nation takes a largely territorial view of holding companies with global income. In fact, companies that invest outside of Andorra, thereby deriving their profits externally, are only subject to a 2% headline rate. Otherwise, company profits produced domestically would be subject to a flat 10% rate.
Despite being termed “not quite a tax haven”, Andorra punches above its weight by seemingly balancing the need to fill the state coffers with the desire of entrepreneurs to minimize their taxes. This really is a win-win arrangement where the nation receives the benefit of tax revenues and, potentially, employment gains, through the attraction of offshore business.
It’s a smart tax policy and explains why Andorra’s GDP has continued to grow, mostly falling within the 2.00% to 4.00% band.
What Residency Visa Options are Available
I’ll try and keep this section relatively brief because I’m certainly not an expert on Andorran residency visas. However, I’ve consulted with individuals that are and I’ll list their details in the resources section to contact if you need any further information. Finally, there are quite a few options and visa types available, but I’ll confine my discussion only to passive and active residency visas.
Andorra Active Residency Visa
Active residency is a visa type that is primarily aimed at those that wish to reside in the country for more than 183 days per calendar year. This effectively makes them fiscal, or tax residents and they would be expected to pay Andorran tax at the levied rates.
Additionally, active residency allows full self-employment as well as those working on local employment contracts. However, for most expatriate entrepreneurs it’s likely to be the self-employed status that they seek. Subsequently, the “Compte Propi” allows the formation of an Andorran company, hiring of local staff, local business operations, and the residence of the residency class visa holders.
This is an excellent option for those individuals looking to relocate their existing, or future, business operations to Andorra and establish their new lives within the country. It brings with it the obligation of tax for both personal and corporate income tax but, at severely reduced rates, as compared to your typical western country.
The basic requirements are:
- The purchase, or lease of property, of at least 20sqm.
- The normal police check documents and personal identity docs.
- Government approval for foreign investment
- Andorran company formation
- €3k in deposited share capital
- A €15k deposit with the Authority of finance (AFA)
Obviously, there are plenty of other requirements, but the basics above should get any research into Andorra residency started.
Andorra Passive Residency Visa
In contrast to active residency, Andorra passive residency provides a pathway for individuals who wish to be a resident whilst largely operating their businesses externally. In practice, what this means is that you get to secure all of the lifestyle benefits of Andorran residency with none of the active residency tax obligations. This visa type is perfect for those individuals who mainly operate their businesses online, or offshore, but still wish to retain their connection, and requisite standard of living, with a Western/European style nation.
There is a range of passive residency options, depending on your financial and personal circumstances, which you can use to both minimize tax and diversify your global residency options. The main types are:
Residence without Lucrative Activity
An application under this category typically requires a €400,000 investment (€50k is the deposit with AFA) and you will need to be present in Andorra for 90 days per year to maintain it.
Additionally, you will need to have earnings of at least 300% of the minimum salary for an individual (100% more per dependent) and you will need to have appropriate medical insurance in place.
You can invest in a range of Andorran asset classes including:
- Investment/Term Deposit Accounts
- Government Bond Investments
- Andorran Property
My advice would be to consider placing your investment into property given the rising inflation currently present around the world. Additionally, real estate is a good investment in Andorra due to the relative size of the country and the level of demand for rentals and sales.
Professionals in International Business
This is an excellent category for entrepreneurs and individuals that are looking to set up or redomicile an existing business to a tax-effective location. Again, you will need to lodge a €50k bond with the AFA and you must spend at least 90 days within Andorra annually. Additionally, you will need to submit a 3-year business plan, as part of your application, which will be assessed along with your general business experience and background.
It should be noted that your new business will need to do at least 85% of its business offshore to Andorra and it will still need to pay tax as part of the Andorran tax system. However, the very reasonable headline corporate tax rate of 2%, and no withholding tax on dividend payments, make this a no-brainer.
Scientists, Athletes & Artists
I won’t go into this category in any detail, given most of you will not be international athletes, except to let you know that it is available. If you fit the criteria of being internationally renowned for your sport or science, then you may be able to seek a residency permit solely under this category.
How Do I Secure a Golden Visa for Andorra?
It isn’t as expensive, or as difficult, as it might appear at first glance. Sure, you could blunder through the process of dealing with government departments, organizing your own property rental or purchase, and relocating your whole life to Andorra in one go.
However, you are likely to find it hard to do so without plenty of mistakes and experiencing a bureaucratic nightmare along the way. Trust me, having relocated to numerous countries in my lifetime I have made more mistakes and cultural faux pars than anyone!
If I had my time back again, I would always use a local specialist to, not only lodge my application but also to help me settle into life in my new home. Relocation specialists speak the language, know the local immigration rules, have the contacts to get things done, and can genuinely make your life comfortable.
If you need special assistance in your move, or simply don’t want to go through the pain of doing it yourself, then contact the guys at Andorra Guides. They have spent their professional careers helping people like, you and I, relocate to the country.
As much as I hate insurance companies, you should never be without some form of insurance coverage when you are living or traveling in foreign lands. The number of horror stories I have heard and seen personally is shocking and traveling without decent medical and personal insurance is tantamount to playing Russian Roulette as it’s only a matter of time before you get sick overseas.
Thankfully, as part of Andorra’s residency schemes, they generally require insurance cover (especially for Passive Residency). In most cases, you are going to need a mixture of medical, old age, and incapacity coverage with appropriate levels, and this will normally need to be included with your application.
Local insurance companies are readily able to provide this service and you can expect to be out of pocket around €1,250/year. I actually think this is entirely reasonable, especially given what I regularly pay to access doctors in my home country.
Anyway, do yourself a favor and make sure that you ALWAYS have appropriate medical coverage no matter where you are.
Further Assistance & Key Resources
|Government||Andorran Finance Authority (AFA)||https://afa.ad|
|Relocation Specialists||Andorra Guides||https://andorraguides.com/services/|
|Real Estate||Busco Casa||https://www.buscocasa.ad|