Myths and Realities about Expatriation to Andorra:
Expatriation to Andorra has become a particularly attractive option for French entrepreneurs and professionals looking to optimize their tax situation and improve their quality of life. However, many misconceptions circulate about residency conditions, taxation, and the cost of living in this Pyrenean principality. In this article, we will analyze the most widespread myths and present the reality, so that you can make an informed decision regarding your relocation project to Andorra.
Are France and Andorra so different? What are the real tax advantages? How does the residency application process actually work? Continue reading to discover what really awaits you.
Index:
- Conditions for obtaining residency in Andorra
- The Andorran tax regime compared to the French system
- Business creation: processes and requirements
- Living in Andorra: everyday realities
- Cost of living: misconceptions and concrete facts
- Education and healthcare in the principality
- Transportation and connectivity with France
- Your expatriation project: how to proceed
Conditions for obtaining residency in Andorra
Many people think that obtaining residency in Andorra is a mere formality. Let’s examine the realities of the process for French citizens.
The myth of easy and fast residency
Contrary to the widespread idea, obtaining Andorran residency requires meeting specific requirements and following a rigorous administrative process. For the French, access to the territory is indeed simplified compared to other nationalities, but this does not mean that settlement is automatic.
The two pathways to residency
In Andorra, there are two main categories of residency, each with its own conditions:
- Active residency: intended for people who wish to work or create a business in Andorra. To obtain it, you must own at least 34% of the shares of an Andorran company, exercise a management role, and demonstrate that the company is operational within three months of its creation.
- Passive residency: for those who do not plan to engage in professional activity in the country. It requires proving annual income exceeding 300% of the Andorran minimum wage (plus 100% for each dependent), as well as a minimum investment of 600,000 euros in Andorran assets (real estate, financial instruments, or participation in the capital of local companies).
The physical presence criterion
Another persistent myth concerns the possibility of maintaining your life in France while benefiting from Andorran tax status. The reality is quite different: to be considered a tax resident in Andorra, you must physically stay there for at least 183 days per year (active residency) or 90 days (passive residency). French and Andorran tax authorities work closely together to prevent fraudulent dual tax residency.
The Andorran tax regime compared to the French system
Taxation is often the main motivation for expatriation to Andorra. Let’s see what really distinguishes the two systems.
The “zero tax” myth
Contrary to popular belief, Andorra is not a tax-free paradise. The country has developed a modern tax system aligned with international standards. The major difference lies in the tax rates, which are significantly more advantageous than in France.
Comparison of France-Andorra tax rates
The contrast between the two tax systems is striking:
- Income tax: capped at 10% in Andorra, compared to up to 45% in France
- Corporate tax: 10% in Andorra, compared to 25% (standard rate) in France
- VAT (IGI in Andorra): 4.5% in Andorra, compared to 20% (standard rate) in France
- Social security contributions: considerably reduced in Andorra compared to the French system
Tax agreements between France and Andorra
Since the signing of the bilateral tax agreement in 2015, relations between the two countries have normalized. This agreement effectively prevents double taxation and fights against tax evasion, while providing a clear legal framework for French expatriates in Andorra.
Business creation: processes and requirements
Creating a company in Andorra is often perceived as complex or reserved for the wealthy. Let’s examine the realities of entrepreneurship in the principality.
Investment conditions
To create a limited liability company (SL) in Andorra, a minimum share capital of 3,000 euros is required, which remains comparable to French requirements. However, for public limited companies (SA), the minimum capital rises to 60,000 euros, an amount higher than the 37,000 euros required in France.
The authorization process for French investors
As a French citizen, you will need to obtain a foreign investment authorization before establishing your company. This procedure involves presenting a detailed business plan and proof of a clean criminal record. The processing time generally varies between 4 and 8 weeks, a faster process than in many European countries.
The requirement for real activity
A widespread myth is the ability to create a “shell company” in Andorra. In reality, the authorities require that your company conducts substantial economic activity in the country, with verifiable physical presence and, depending on the structure, the hiring of at least one local employee if the administrator does not reside in Andorra.
Living in Andorra: everyday realities
Beyond the fiscal and administrative aspects, quality of life is a determining factor in the choice of expatriation. Let’s discover daily life in Andorra for a French person.
Cultural offerings and leisure
Contrary to the preconceived idea of a country where “there is nothing to do,” Andorra offers a remarkable quality of life, particularly for nature and sports enthusiasts. The country regularly hosts international cultural events and has modern leisure facilities:
- World-class ski resorts like Grandvalira and Vallnord
- Exceptional networks of hiking trails and cycling paths
- Caldea thermal spa center, the largest in Southern Europe
- Museums, art galleries, and seasonal festivals
Adaptation to the local culture
For a French person, cultural adaptation is facilitated by linguistic proximity (French is widely spoken in addition to Catalan, Spanish, and Portuguese) and cultural similarities. The size of the country also favors integration into an expanding international community.
Cost of living: misconceptions and concrete facts
The idea that “everything is cheaper in Andorra” deserves to be nuanced. Let’s analyze the different aspects of the cost of living compared to France.
Real estate and housing
The Andorran real estate market has experienced a strong increase in recent years, reducing the gap with certain French regions. However, prices per square meter remain on average lower than those in major French cities such as Paris, Lyon, or Nice. A quality apartment in the center of Andorra la Vella costs approximately 30% less than an equivalent property in the center of Nice.
Everyday consumption
While electronic products, fuel, alcohol, and tobacco are significantly cheaper in Andorra thanks to reduced VAT, food products and everyday services show prices similar to those in France. The absence of certain specific French taxes, however, represents substantial savings for households.
Services and insurance
Banking services, insurance, and telecommunications have rates comparable to those in France, sometimes slightly higher due to the limited size of the Andorran market. On the other hand, personal services are generally more affordable.
Education and healthcare in the principality
For French families considering expatriation, education and healthcare issues are paramount. Let’s examine these essential aspects.
The multilingual education system
Andorra offers a unique education system where three systems coexist: Andorran, French, and Spanish. For French families, the possibility of enrolling their children in the French system (up to the baccalaureate) constitutes a considerable advantage, allowing educational continuity without disruption.
Healthcare coverage
The Andorran healthcare system, although private, offers high-quality services. Residents must mandatorily join the Andorran Social Security Fund (CASS), which covers 75% of medical expenses and 100% of hospitalizations. Agreements with France also allow expatriates to benefit from care in France if necessary.
Access to medical infrastructure
The principality has a modern hospital (Hospital Nostra Senyora de Meritxell) and a network of private clinics offering specialized services.
Transportation and connectivity with France
The question of accessibility is often neglected when planning an expatriation. Let’s see how Andorra connects with France.
Road accessibility
Contrary to preconceived ideas, Andorra is not isolated. Located just 2.5 hours from Toulouse and 3 hours from Perpignan by road, the principality is easily accessible year-round. The roads are perfectly maintained, even in winter thanks to an effective snow removal system.
Air transportation
Although Andorra does not have its own international airport, nearby air infrastructure offers excellent connectivity:
- Toulouse-Blagnac Airport: 170 km away (2.5 hours)
- Barcelona-El Prat Airport: 200 km away (3 hours)
- Girona Airport: 200 km away (2.75 hours)
Remote work and digital connectivity
Andorra has one of the most advanced digital infrastructures in Europe, with fiber optic internet coverage across almost the entire territory and connection speeds superior to those available in many French regions, thus facilitating remote work with French partners.
Your expatriation project: how to proceed
After demystifying the main misconceptions about life in Andorra, let’s address the implementation of your expatriation project.
Strategic planning
A successful expatriation requires meticulous preparation. We recommend developing a 6 to 12-month timeline including exploratory visits, housing search, administrative procedures in France (contract termination, declaration of tax residency change) and in Andorra (residency permit application, bank account opening).
Professional support
Given the complexity of administrative and tax procedures, using experts specialized in expatriation to Andorra constitutes a wise investment. These professionals will guide you through each step of the process, helping you avoid costly mistakes and optimizing your relocation.
Contact our experts to implement your project
At Clickand, we have been accompanying French entrepreneurs and professionals in their relocation projects to Andorra for many years. Our multidisciplinary team perfectly masters the specificities of France-Andorra expatriation and offers you a personalized service to implement your project in the best conditions.
For a personalized consultation and answers to all your questions, contact us today. Our experts will help you transform your expatriation project into reality.
