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Tax residence in Andorra
There are two main types of residence in Andorra: active tax residence, for people who work in Andorra or who have a business project to develop in the country, and passive residence, for those who, without working there, want invest and reside in the Principality. We explain below the conditions for obtaining the two residency conditions.
The different possibilities
ACTIVE RESIDENCE
Active tax residence is granted to people who work in Andorra; there are two ways to get it.
Exercise a professional activity in Andorra
If you have a job offer from an Andorran company to work in the territory, you have the right to apply for active residence in Andorra.
Create a company on Andorran territory
If you have a business project in the Principality, you can obtain active residence. To enable you to become an active resident in Andorra, your business activity must meet the following conditions :
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The contractor must employ at least one person.
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The headquarters of the company must be in one of the 7 parishes that make up the Andorran territory.
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A percentage of the production of services or goods (in some cases up to 85%) must be devoted to the external market of Andorra (not only to the local market).
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Beneficiaries of the professional tax residence permit in Andorra must deposit at least € 15,000 with the Andorran Financial Authority (AFA, ex INAF). In case of non-renewal of the residence permit, this amount will be returned to you.
Conditions for obtaining active residence in Andorra
If you justify a professional activity or the creation of a business in Andorra, you can obtain the status of active resident. The formalities must be carried out with the Ministry of the Interior, and the conditions to be respected are as follows :
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Live at least 183 real days per year in the Principality of Andorra.
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Be at least 18 years old.
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Provide proof that you have a clean criminal record.
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Have a contract / promise of employment with an Andorran company.
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Create a company and own more than 10% of its shares.
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Submit to a medical examination.
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Establish your tax domicile in Andorra.
THE PASSIVE RESIDENCE
Passive resident status in Andorra is granted to people who do not work in Andorra but wish to reside there.
Conditions for obtaining passive residence in Andorra
To obtain authorization for passive residence in Andorra, you must provide certain information and documents :
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Provide proof that you have a clean criminal record.
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Passport and civil status certificate.
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Health, retirement and disability insurance certificate.
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For those over 60, a certificate of health insurance.
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Provide proof of income at least 4 times higher than the national average.
Please note that all foreign documents must bear the Hague apostille.
The passive residence permit is also subject to the following conditions:
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Be at least 18 years old.
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Live at least 90 real days a year in the Principality of Andorra.
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Have an official address.
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Provide a bank document proving that € 50,000 has been deposited with the AFA (Andorran Financial Authority), unpaid deposit, plus € 10,000 for each member of the family.
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Undergo a medical examination at the immigration service.
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Justify an income higher than 300% of the annual minimum wage in force in Andorra.
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Obligation to invest at least € 400,000 in the Principality of Andorra. This investment can take several forms (compulsory unpaid deposits with the AFA are deducted from this sum € 50,000).
Different statuses of passive residents
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People without an employment contract or who do not intend to set up a company can also apply for passive residence in Andorra. This residency modality is divided into 3 categories: A, B and C.
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Passive resident in Andorra category A: for people who live in Andorra without exercising a professional activity.
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Passive resident in Andorra category B: for people who have an income from an international activity and not a local one.
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Passive resident in Andorra of category C: for people of international renown (sportsmen, researchers and artists).
TAXATION IN ANDORRA
There are many reasons why foreigners wish to obtain residence in Andorra: the natural environment, the ski resorts, its thermal spa, unique in Europe, etc. But the country's tax system is also attractive to foreign investors. Effectively, Andorran taxes are among the lowest in the world, between 0 and 10% maximum.
Main taxes for future Andorran residents
Indirect general tax (IGI)
Declared in 2013, the IGI is a tax on consumer goods and services, similar in many ways to French VAT. Its general rate is 4.5%, one of the lowest on the European continent.
Personal Income Tax (IRPF)
Decreed in 2015, it is the tax which relates to the income received by natural persons. The tax rate is as follows :
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Less than € 24,000 in annual income: 0% tax rate.
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Between € 24,000 and € 40,000 in annual income: 5% tax rate.
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Annual income greater than € 40,000: tax rate of 10%.
The IRPF rate, which cannot exceed 10%, is among the lowest income taxes on the European continent !
It applies to the income of all natural persons :
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Income from the exercise of a profession or activity, this including the sum of remuneration, salaries and bonuses.
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Income related to the operation of real estate, in particular rental property.
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Income from certain activities such as commercial, professional or administrative activities.
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Income from property or movable rights, as well as bank interest.
Donations, inheritances, income resulting from the sale of immovable property and the acquisition free of charge are not subject to the IRPF.
Are subject to the IRPF all persons who reside in Andorra more than 183 days per calendar year, and those who exercise an economic activity or have economic interests which allow them to make profits in the Principality.
The IRPF declaration must be submitted between April 1 and September 30 of the calendar year following the corresponding liquidation period.
Other taxes in the Principality
To obtain the status of active residence, you will have to exercise a professional activity or create a business in the Principality. If you want to create your company, you will be subject to corporation tax (IS). Decreed in 2012, the SI applies to profits made by companies and its tax rate does not exceed 10%.
Capital gains tax
Added value for tax residents in Andorra
Decreed in 2006, it applies to sales of real estate whose purchase dates back less than 10 years. To simplify, let's say that at the time of the sale an average withholding of 5% is applied on the amount of the realized capital gain. If, in the end, there is no capital gain, or if the sale is not subject to tax, the amount withheld is returned within 3 to 6 months.
During this time, the Andorran authorities check that the legislation is respected and control the value of the declared property. If the property has been owned by the same person for a minimum of 10 years, the sale is not subject to tax.
Vous pouvez télécharger la convention sur la double imposition ici