Tax residence in Andorra

Tax residence in Andorra

Andorra has a variety of different residence types to offer for those wishing to live in Andorra. As a small country the immigration policies are relatively strict, but since 2012 there is several types of residence permits available depending on your profile. There are two very different profiles, but both are targeted for economical interest to bring foreign investment and economic activity to the country. The Andorran government wishes to attract entrepreneurs as well as people wishing to spend their retirement in the country. The principality has tax and general advantages depending if you opt for active or passive residency. After certain conditions are met, residents can seek to be a citizen via naturalisation.

Types of residence in Andorra

There is two main types of residency in Andorra, which summarize the different subtypes. These are the active residency and the passive or also called non-lucrative residency.

The active residence is meant for people that are actively working in Andorra under a contract being hired by an Andorran employer or working as self-employed or “autonomo” for their own company. More information on the active residency in Andorra you might find here.

The passive residence is ideal for those that are no longer actively working as they live in retirement or live from their passive income or wealth. You may click here for more information on the passive residency.

AndorraConsultants will advise you on the best type of residence for you as it depends on multiple factors and one type of residence does not necessarily exclude benefits that another type may have. For example, passive residents may own and be a director of an Andorran company however they may not actively work and receive a salary from the company. Nevertheless they may exercise the administrational control of the company and perceive dividends from the Andorra company.

Different residence types imply different conditions, please refer to more details in the links above. At AndorraConsultants we will make you aware of those and consult you on the option that best matches your living circumstances. Finally we will accompany you in each step including the presential interviews and doctor appointments at the Andorran immigration.

Our team consults you in the following languages: Spanish, English, France, Russian, German, Portuguese, Chinese and Catalan. We are the largest consultancy also on immigration matters in Andorra and at your service.

Taxation Advantages Andorra

Andorra is a low-tax jurisdiction and has multiple tax advantages to offer such as the following:

  • Max. 10% income tax
  • 24000 EUR tax deduction on all salaries
  • 2-10% corporate tax on company profits
  • Dividends from Andorran entities are taxed at 0%
  • There is no wealth tax nor inheritance tax in Andorra
  • Holdings with a minimum participation in foreign entities are exempted from taxation
  • VAT is at 4.5% standard rate for consumer goods
  • Certain pension funds products are tax exempted in Andorra

General Advantages Andorra

It may be for taxation reasons, but there is much more that Andorra has to offer to clients that wish to relocate here. Discover some of the unique advantages here:

  • Andorra literally has almost no crime. A robbery makes it to the newspaper in this country where the murder rate is below 1 per year.
  • Unemployment in Andorra stands at below 2%
  • The life expectancy is one of the highest worldwide normally among the first three according to the World Health Organisation 
  • Clean air all around you with unpopulated mountain terrain making up most of Andorra’s surface area
  • GDP per capita among the top 20 countries worldwide
  • 100% fiber optic coverage in Andorra
  • Between 280 – 300 days of sunshine
  • For non EU citizens this is very advantageous you may travel freely around the Schengen area with an Andorran residence permission up to 90 days.

Becoming a citizen of Andorra through “naturalisation”

Many clients are wondering when they may become a citizen in Andorra. To get the citizenship in Andorra you need to spend between 15 – 20 years being a permanent resident, depending on the type of residency. Current political discussion might lead to legal changes in the immigration laws to reduce it to 15 years. This means that you need to maintain your residency of the same type for this number of years to be able to ask for Andorran nationality.

Note that currently only about 50% of the population is made up of Andorran nationals. More than half of the population has a residence status.