Tax Residency and Nationality in Andorra: Complete Guide for Expatriates
The Principality of Andorra, nestled between France and Spain, attracts many expatriates thanks to its exceptional living environment and advantageous tax system. This small Pyrenean state offers various possibilities for obtaining tax residency, each adapted to different expatriate profiles. Discover the procedures to follow, the required conditions, and the tax advantages related to settling in Andorra.
Types of Tax Residency in Andorra
To establish tax residency in Andorra, two main paths are offered:
- Active residency: intended for people engaging in professional activity within the Principality
- Passive residency: designed for investors and individuals without lucrative activity in Andorra
Other special authorizations also exist for individuals with particular talents or recognized prestige in scientific, cultural, or sports fields.
Active Residency: Working in Andorra
Active residency allows you to establish tax residency in Andorra by providing proof of local professional activity.
Obtaining Employment in Andorra
For employees, being hired by an Andorran company constitutes the most direct route to applying for tax residency. You will need to:
- Stay at least 183 days per year in the Principality
- Have a proper employment contract
- Establish your main residence in Andorra
Creating or Investing in a Company
Another approach consists of developing entrepreneurial activity by respecting these conditions:
- Establish the company’s headquarters in one of the seven Andorran parishes
- Reside for a minimum of 183 days per year in the territory
- Make a deposit of €50,000 with the Andorran Financial Authority (AFA), an amount that is returnable in case of non-renewal of residency
Passive Residency: Settling Through Investment
People without professional activity in Andorra can obtain passive tax residency by committing to:
- Reside at least 90 days per year in the Principality
- Invest a minimum of €552,500 in the form of a bank deposit, real estate purchase, or investment in an Andorran company
- Deposit a guarantee of €47,500 with the government (plus €9,500 per dependent)
Passive residency is divided into three categories:
- Category A: people settling without engaging in professional activity
- Category B: individuals deriving their income from activities carried out abroad
- Category C: personalities benefiting from international recognition
Passive residents can manage their assets and hold positions as administrators in companies where they own at least 50% of the shares.
Procedures and Conditions for Obtaining Residency
For Active Residency
The steps to obtain active tax residency must be carried out with the Andorran Ministry of the Interior. You will need to:
- Be at least 18 years old
- Present a clean criminal record
- Pass a mandatory medical examination
- Effectively reside a minimum of 183 days per year in Andorra
- Transfer your tax domicile to the Principality
- Either have an employment contract or hold at least 34% of the shares in an Andorran company
For Passive Residency
To obtain passive residency, the conditions are as follows:
- Invest at least €552,500 in Andorra
- Pay a guarantee of €47,500 (refundable if not renewed)
- Add €9,500 of guarantee per family member
- Be of legal age (minimum 18 years)
- Provide a clean criminal record extract
- Undergo a medical examination
- Stay at least 90 days per year in Andorra
- Demonstrate income at least four times higher than the national average
- Have an official address in the Principality
Andorran Tax System: The Main Taxes
IRPF: Personal Income Tax
Established in 2015, the IRPF constitutes the main contribution of Andorran tax residents. Its progressive scale is characterized by:
- An exemption for income below €24,000 annually
- A rate of 5% for income between €24,000 and €40,000
- A rate of 10% for income exceeding €40,000
Deductions are possible depending on personal and family situation, contributions to pension funds, or expenses related to the acquisition of a primary residence.
The IRPF declaration must be submitted between April 1 and September 30 of the year following the tax period.
IGI: General Indirect Tax
The IGI is the Andorran equivalent of VAT, applied to consumer goods and services. Its maximum rate of 4.5% is considerably lower than in neighboring countries, reinforcing the Principality’s tax attractiveness.
Other local taxes, generally modest, may apply depending on the parishes.
Obtaining Andorran Nationality
A Long-Term Process
Unlike obtaining tax residency, acquiring Andorran nationality requires:
- Uninterrupted residence of 20 years in the Principality
- Passing a general culture exam about the country
- Mastery of Catalan, the official language of Andorra
- Abandonment of original nationality
This process therefore requires a long-term personal commitment but is not necessary to benefit from the country’s tax advantages, which are accessible as soon as tax residency is obtained.
Conclusion
Obtaining tax residency in Andorra represents an attractive opportunity for many profiles, from entrepreneurs to investors to employees. The simplicity and transparency of the Andorran tax system, characterized by the absence of inheritance and wealth taxes, as well as very competitive tax rates, explain the growing appeal of this jurisdiction.
To facilitate your settlement procedures, guidance from a competent gestoria is often recommended. Clickand, our agency located in Escaldes-Engordany, has the necessary expertise to guide you through all administrative procedures and advise you according to your personal situation. Our professionals are perfectly familiar with the subtleties of Andorran legislation and can assist you in obtaining your tax residency.
