Residency: Living in Andorra
Augé Legal & Fiscal is a leader in Andorra in the area of immigration. We put all of our experience to work for the client and provide advice to find the best residency status depending on the client’s, and his family’s, personal, professional, corporate and tax situation. Naturally, we also protect the interests of Andorran residents.
The self-employed residence permit is the one that is best suited to the needs of a businessman who wants to live in Andorra and set up a national or international business. As a result, this residence permit is the most popular of the residence with work permit types, along with residence and employment by a third party.
Andorra makes available to new businessmen a range of services for them and their families, such as advantageous personal tax rates and the possibility to bring in one’s children and place them in tri-lingual schools, all in an unrivalled natural setting.
Example: A French businessman in the digital marketing and e-commerce sector with a wife and minor children decides to leave his country of residence to benefit from lower personal and corporate tax rates. In his country, his activity is subject to significant taxes, and his company’s dividends are also subject to personal taxes (a clear case of dual taxation). Moreover, he is starting to accumulate a certain amount of wealth that will require him to make a large payment every year.
The businessman wants to find a place with a more beneficial tax system that at the same time offers an ideal setting for his family and for the education and upbringing of his children.
Andorra offers the ideal setting for this businessman:
- A 10% tax rate on his activity with the possibility to reduce the rate on e-commerce to 2%.
- His company’s dividends are exempt for the businessman: there is no dual taxation.
- No tax on wealth or donations. Easier inheritance planning.A country with a high standard of living and a green and clean environment.
- A telecommunications network that covers 100% of the inhabited territory to ensure his business can stay up and running.
- A safe country with one of the lowest crime rates in the world.
- A triple educational system with learning in up to four languages.
The client is currently living in Andorra with his wife and his children are studying in school. His business is running better than ever while he enjoys the peace of mind and security offered by Andorra.
Process of obtaining a self-employment residence permit
- 1The first step is to reserve the company name. The businessman reserves the name of his company and specifies its purpose.
- 2The businessman must then present his credentials to the government in order to be able to request the creation of a company in the country (authorisation for foreign investment).
- 3Once the foreign investment is approved, a bank account must be opened in the country in which to deposit the company’s capital.
- 4The above process ends with the signing of the company’s charter before a notary.
- 5Once the company is incorporated, the businessman must find a location for which to obtain his business permit (Augé Real Estate), which authorises him to start issuing invoices.
- 6Accounting services for the company (TAX AG)
Once the businessman’s company is incorporated (point 4) and he has a location in Andorra, whether rented or purchased, he can request a residence permit by presenting his credentials a second time.
When his request is approved, a medical exam is the final stage before the residence permit is granted.
This type of permit allows living and working in Andorra.
Example: A Spanish consultant trained in the best universities in his field wants to take the next step in his career. He lives in Barcelona and has several important job offers throughout Spain and from one company in Andorra. The job description is fairly similar at all the companies, as are the financial conditions (gross salary) and schedule.
The consultant decides to accept the offer in Andorra. His reasons include:
- Cultural and geographic proximity to Barcelona: the consultant can stay in close contact with friends and family at his former place of residence.
- Tax benefits: his salary in Andorra will be taxed at a maximum rate of 10%, including an exemption on the first €24,000 of his salary and a 50% bonus on the next €16,000. In Spain, he would be taxed on a sliding scale, eventually reaching rates well in excess of those paid in Andorra. In fact, the consultant has reached the conclusion that his taxes in Andorra on his new salary will be even lower than what he paid in Spain on his former salary.
- The social security contribution rate in Andorra is 22%, of which only 6.5% is payable by the employee. In Spain he would pay more. This difference will let him take out a complementary service in Andorra that will provide him full coverage in Andorra and extensive coverage abroad, including on his trips to Spain, whether for business or pleasure.
- The consultant and his partner want to start a family and he will help his partner, who also lives in Barcelona, to find work in Andorra. Its ideal educational system, environment and safety all add up to great advantages for the new family that will grow up in Andorra.
This residence permit is intended for businessmen who wish to manage their international investments and businesses from Andorra without taking part in business activities in Andorra.
Many people who request this permit are former businessmen, recently retired, who want to be able to manage their wealth from a place with an outstanding quality of life. Andorra also offers low tax rates on savings income and no taxes on wealth, donations and inheritances, which are additional advantages to bear in mind with respect to neighbouring countries.
Example: A Spanish citizen, married and recently retired, wants to find the best location in which to enjoy his sizable income and wealth with his wife, who is also retired. He used to be a successful businessman, but now his companies are in good hands and he enjoys the income he derives from his wealth.
Thus, he wants a safe and secure environment with favourable tax rates. He likes the mountains, but he also owns various properties on the coast and in different cities around the world, where he travels with a certain frequency. As a result, he will spend time in different places around the world, while remaining aware of the conditions he must satisfy in order to qualify as a resident for tax purposes in the most favourable territory.
Moreover, thanks to his many years in business, he has become good friends with other businessmen, some of them already retired and some on the home stretch of their careers. None of them need to run their businesses directly and they have more time for themselves and their families. This group of friends usually spends summers together and each member tends to follow the recommendations given within the group.
Andorra offers a non-work residence permit for both the retired businessman and for those who are about to retire. The ability to manage their direct investments from afar, along with a very favourable tax system and the flexibility offered by this residence permit allow these individuals to reconcile something that is difficult for wealthy businessmen: living in a country with generous tax rates and the ability to spend long periods of time in other countries.
There are many cases like this particular example, and thanks to recommendations based on Andorra’s many benefits, these new residents turn into ambassadors for the Andorran brand among their friends, who consider Andorra as a serious candidate for their respective places of residence.
A non-work residence permit is obtained by making a substantial investment in Andorra.
- 1Preparation of two dossiers to certify the investor by showing that he does not have a criminal record and that he has the resources needed to live in Andorra without working.
- 2Dossier for the Immigration Department.
- 3Bank dossier.
- 4€50,000 deposit and €10,000 for each dependent relative.
- 5Once the dossier is approved, the future holders of the residency permit will have to undergo a medical exam before being granted residency.
- 6The investor has 6 months from the time he is issued the residence card to make further investments totalling €400,000.
- 7Finally, the investor can opt for a wide range of services, such as, for example, incorporating a company in Andorra without having to undergo the process required for foreign investments.
The residence permit for professionals with an international presence is very specific. A businessman with a detailed project and business plan who cannot remain in the same territory for the majority of the year can request this residence permit. Some of its requirements are the same as for a non-work residence permit, and its tax advantages are the same as for any residence permit.
Example: A German businessman is an ambassador for various large German and Austrian companies in the field of LED lighting and other technologies, for which he works as a consultant and agent to develop their businesses. He also has a second business passion, that of being involved in organising events of different types (sports, cultural, fashion and others).
This businessman has a German partner but he is not married. His children are being schooled under their mother’s care. He thus has no formal ties to Germany’s tax agency. He spends more than 200 days a year travelling around the world on business, but he remains a resident of Germany for tax purposes.
He is considering a new challenge, that of expanding his business internationally. He has focused on France and Spain as countries where his activities can grow considerably. He has a viable business plan and wants to be able to implement it under the best of conditions.
The businessman is thus looking for a favourable tax environment for the expansion of his new activity, considering that he will have to travel even more during the year while complying with the requirements to remain a resident for tax purposes of his chosen country.
The Andorran residence permit for professionals with an international presence is the perfect solution for a businessman who wants to be actively engaged in his international businesses while residing in a country that offers significant tax benefits.
This specific business profile is gaining in importance in Andorra thanks to the great flexibility offered by this residence permit.
The procedure for obtaining this permit is substantially similar to that for obtaining a non-work permit. The difference is that instead of making an investment, the applicant must present a full and detailed business plan so that the government can evaluate Andorra’s interest in said plan.
The services available to the businessman, once he becomes a resident of Andorra, are similar to those offered to other types of residents.
Example: A German scientist who teaches at some of the world’s most prestigious universities and works with elite scientific journals and research teams decides to take up residence in some country. In recent years he has barely spent three months a year in his native country, having to travel occasionally for periods of several weeks to various countries around the world as a result of his busy academic and research activity. To date, he and his wife have been residents of Germany for tax purposes due solely to their nationality and to being the place where they spend most of their time.
Andorra offers him and his wife the chance to become residents of the country on the sole condition that they spend at least 90 days in Andorra and deposit €60,000 in the Institut Nacional Andorrà de Finances (€50,000 for himself and €10,000 for his wife). His global income will thus be taxed in Andorra, without prejudice to any withholdings that may be applied by the paying entity at the country of origin.