Tax residency in Andorra A Principality with an area of 468km2 situated strategically in Europe between Spain and France, Andorra offers a number of advantages. The country, which has around 80 000 inhabitants, has undertaken several changes in the last few years (2013 – 2014) including the introduction of a 4.5% VAT and a low tax on natural persons and companies (a maximum of 10%). Relaxation of rules around foreign investment also offer opportunities for foreign investors interested managing their international activities and establishing their tax and physical residence in Andorra. Becoming a resident of Andorra and benefiting from its favourable tax policies attracts both people from neighbouring countries (France and Spain) but also people without European nationality hoping to settle in a country which is geographically part of Europe. Many Russians and more recently Asian people are interested in Andorran residency. Andorran tax policy – Taxes Fiscal residents of the Principality of Andorra can choose between two distinct statuses: – Residency without a work permit (category A) – Residency with a work permit In most cases, the choice leans towards residency without a work permit (formerly called “passive residency”). This type of residency allows the resident to be taxed at a variable rate ranging from 0% to a maximum of 10%. This rate is one of the lowest in the world for a developed country. Personal income tax: 0 to 10%. There is no inheritance tax in Andorra, nor is there a wealth tax. Living in Andorra – Real estate Life in Andorra is calm and very safe. With an excellent level of political and social stability, the country is far removed from wars and other insecurity-related problems. Its generally good climate is enjoyed both by sporty, active people and those seeking a tranquil, temperate living environment. The main activities are skiing in the vast ski areas (especially the domaine of Grau Roig – Pas de la Case), shopping (the low VAT rate is very attractive for a number of products), the Caldea / Inuu spa as well as the local cuisine. The main parishes of Andorra are Old Andorra (Andorra la Vella) which is the capital, Escaldes Engordany and Encamp. The other parishes (communes) are La Massana, Sant Julia de Loria, Canillo and Ordino. The most commonly used languages in the Principality are Catalan, Spanish, French and English. The education system is of a good standard. Different real estate opportunities exist in Andorra, especially for those wanting to get the best return on their compulsory 350 000 euro investment which can be made in local real estate. Feel free to consult us on this matter. Banks in Andorra The Andorran banking system is covered by bank secrecy, which is guaranteed by the constitution. Local banks mainly specialise in wealth management. They are locally owned and have excellent liquidity rates. The banks have an e-banking service allowing for remote account management through a banking interface accessible over the internet. Corporate income tax Companies incorporated in Andorra are taxed at a rate ranging from 0 to 10 % maximum: – 0 % on holding companies with interests in foreign companies. Dividends paid to the Andorran holding are not taxed. – 2 % on international companies trading only overseas. – 10 % on companies with local operations, service activities and all other standard forms of business activity. VAT: Andorra’s VAT rate is 4.5%. Relocation to Andorra: procedure Part of the procedure for obtaining fiscal residency in Andorra requires residents without a work permit to make an investment of 350 000 Euros in Andorra (in the form of a bank deposit in a personal account, in the form of a real estate purchase in the Principality or by an investment of that amount in an Andorran company). A bond deposit of 50 000 Euros must also be made to the government. Residents without work permits receive a Residency status A, B or C (“A” for those who simply live in Andorra without working there, “B” for those engaged in international activities without receiving income from local activities, “C” for international artists or internationally recognised persons (sport players, researchers…). A minimum presence in Andorra of 90 days per year is required for Andorran fiscal residents. Our firm is at your side to take care of the whole relocation procedure and to manage any related matters. Feel free to contact us. Contact us Contact for Andorra Your Name (required) Your Email (required) Your phone number (required) Your Message Send Andorra: jurisdiction summary Local currency: Euros Languages: Catalan, Spanish, French Time zone: UTC +1 (summer time: UTC +2) Calling code: +376 Personal income tax: 0 to 10% Company tax: 0 to 10% VAT: 4.5 %