Expatriation and Tax Optimization of Entrepreneurs in Andorra
To offer you an expert overview of the opportunities that Andorra offers for expatriation and tax optimisation, we are pleased to present you with an exclusive interview with Joan-Francesc Montané Debiais, our tax expert and founder of Gestoria Clickand, which is based in Escaldes Engordany.
Q: Mr. Montané Debiais, can you explain to us what makes Andorra so attractive for entrepreneurs?
JFM: Andorra’s appeal is based on several pillars. Our tax system is remarkably simple and advantageous, with only four main taxes. Corporate tax is at 10%, income tax is capped at 10%, and we have no tax on dividends or inheritance. This tax structure, combined with our political and economic stability, makes Andorra a destination of choice for long-term wealth management.
Q: How does Andorra compare to other tax-advantaged destinations?
JFM: Unlike some destinations, Andorra remains accessible to a wide range of economic profiles. We welcome digital entrepreneurs as well as innovative startups and international holding companies. Our major asset is the balance between attractive taxation and an exceptional quality of life, with a high level of security and a preserved natural environment.
Q: Let’s talk about residency options. Can you explain the differences between active and passive residence?
JFM: This is a crucial point that is often underestimated by future expatriates. Active residency is intended for people who wish to carry out an economic activity in Andorra. This involves the creation of an Andorran company, which will have to generate a turnover and pay local taxes.
Passive residency, on the other hand, does not allow you to work in Andorra. It requires a minimum investment of €600,000, which can take different forms: real estate purchase, financial investment, or participation in the capital of an Andorran company.
Q: How do you advise your clients in choosing between these two options?
JFM: At Clickand, we take a very personalized approach. It is essential to have a clear understanding of the client’s project, their financial means, and their long-term goals. Let’s take the example of a retired couple who want to move to Andorra. The generalist approach would be to recommend a passive resident status. However, if this couple intends to actively manage their financial and real estate assets, it may be more advantageous for them to opt for the status of active residents by creating a patrimonial company.
That’s why we never generalize. Each situation is unique and deserves a thorough analysis. In some cases, we may even recommend starting as a non-resident before considering a full expatriation.
Q: How do you see the Andorran tax landscape evolving in the coming years?
JFM: Although Andorra remains very attractive, we anticipate a gradual evolution of our reception policy. The reception capacity of our small country is not unlimited, and it is likely that the conditions of entry will become stricter in the near future. That’s why we advise interested entrepreneurs to seriously consider moving abroad now, rather than waiting.
Q: What are the specific advantages for holding companies in Andorra?
JFM: Andorra has become a destination of choice for international holding companies. With a dividend tax of 0% and double taxation treaties with 17 countries, we offer an ideal framework for international asset management. In addition, Andorra’s political and economic stability reassures investors in the long term.
Q: Let’s talk about the Andorran banking sector. What are its strengths?
JFM: Our banking sector is robust, with a solvency ratio of 17% at the end of 2023, above the European average. Andorran banks offer investment opportunities usually reserved for institutional investors in other countries. Since the lifting of banking secrecy in 2016-2017, we have gained credibility on the international scene while maintaining our attractiveness for private investors.
Q: What advice would you give to French entrepreneurs who are considering expatriation to Andorra?
JFM: Firstly, it is crucial to prepare well for your tax exit from France. This is an often overlooked but essential point. Secondly, it is important to understand that Andorra is not a tax haven, but a real place to live. To take full advantage of the tax advantages, you must be prepared to spend more than 183 days a year there and establish your economic interests there.
At Clickand, we support our customers every step of the way. We help them evaluate their options, understand the tax and legal implications of each choice, and set up the most appropriate structure for their situation.
Q: A final word on real estate in Andorra?
JFM: The Andorran real estate market remains very dynamic, driven by real demand for housing rather than speculation. The scarcity of land and the constant influx of new residents are keeping upward pressure on prices. It is therefore an interesting sector for investors, especially since rental income also benefits from advantageous taxation.
Andorra offers a unique environment combining attractive taxation, quality of life and investment opportunities. However, the window of opportunity could tighten in the coming years, making the current time particularly good to consider expatriation or investment in the principality.
At Clickand, we are your trusted partner to navigate the complex waters of tax optimization and expatriation in Andorra. Our team of experts in financial and accounting management accompanies you at every stage of your project, from the creation of a company to property management, including the subtleties of expatriation and tax optimization.
