What do I need to have my tax residence in Andorra?

Over time Andorra has evolved and has demonstrated that it is a model to follow in matters of transparency and legality.

It is not surprising that it has become a favorite destination for foreign capital, since there are many advantages that the country brings us.

Hoy en esta entrada os traemos lo necesario para obtener la residencia fiscal en Andorra y el por qué tributar en el país.

How can I fix my tax residence in Andorra?

First of all, what we have to keep in mind, is that a person can reside in different countries but can only obtain one tax residence. This leaves us, therefore, with a country that will allow us to live there but does not automatically change the tax residency.

Otro concepto que debemos de tener claro, es la diferencia entre la residencia administrativa y la residencia fiscal. La residencia administrativa la otorgan autoridades competentes mientras que la residencia fiscal no se adquiere de forma paralela sino que se consolida una vez que se han cumplido una serie de requisitos.

Generally speaking, the conditions required for the country to grant tax residency to the user are governed by the general OECD criteria, which are in line with those of the Principality. These criteria are as follows:

  1. Living in Andorra more than 183 days a year as a person is considered a tax resident of the State in which he/she has a permanent home at his/her disposal, and lives there more than half of the year.
  1. That the center of economic interest is located in Andorra, i.e., that most of the personal income comes from the Principality.
  1. Finalmente, la familia vive en el país, ya sea con una pareja legal y/o hijos menores. Es el llamado centro de interés vivencial.

Si no se cumplen algunos de estos criterios, la nacionalidad puede ser un factor determinante para establecer el lugar de la obligación tributaria, pero dependerá de cada caso y circunstancias. La duración de este proceso suele alargarse en el tiempo entre 1 y 4 meses.

Why choose Andorra to create your company?

The Andorran tax system, like the country itself, has been evolving. It has been inspired by the international tax model and has been adapting to European standards without losing its tax advantage that has always characterized it.

Low tax rates are the main attraction for foreign capital and residents enjoy exclusive advantages such as:

  • The VAT (IGI) rate, at 4.5%, is the lowest in Europe.
  • The non-existence of inheritance tax.

    The non-existence of inheritance tax.
  • Tax-exempt bank interest up to 3,000 euros per year.
  • There is no wealth tax.
  • Low contributions to CASS (Caixa Andorrana de Seguretat Social).
  • 10% maximum tax on profits.

In addition, it is worth mentioning that the staff is quite qualified as it is a trilingual country with an educational system comparable to countries such as France and Spain.

Taxation for Andorran companies

Many companies move to Andorra every year because the taxation reserved for companies is very beneficial for both parties. Not to mention, the double taxation agreements established between the Principality and various countries such as Spain which broaden the possibilities for new projects.

On one hand, the Corporate Tax, applied to profits, is the lowest in Europe, amounting to 10%. Furthermore, it does not affect holdings that own shares in other companies established outside the country.

On the other hand, the tax on goods and services, the General Indirect Tax, benefits from a maximum rate of 4.5%.

Other business advantages of residing in Andorra

There are many tax advantages when setting up a company in Andorra, but there are also other strategic business advantages to consider:

  • Its strategic location in southwestern Europe.
  • The willingness to welcome foreign entrepreneurs and investors is also a novelty for digital startups.
  • The good infrastructure it offers.
  • Almost zero crime rates.

Not to mention its great quality of life in which its landscapes surrounded by nature make the country one of the great ski resorts along with its low pollution rates.

Its climate is ideal for sports lovers in both summer and winter. As well as the gastronomy and its cultural diversity, they create an ideal combination with traditions from countries such as France and Spain, along with their own.

Continue reading here the advantages that digital entrepreneurs have found in the country to choose it as their place of residence in which to develop their projects.

How do I take the first step?

If you are interested in changing your tax residence and betting on the Principality you can contact us and receive the best tax, financial, labor and accounting advice for your project or for you.

The tax obligation can be very complex and can lead to certain dead-end situations. For this reason, having a consultancy and personalized advice to obtain tax residency is the best option.

We will overcome the legal hurdles together so you can start building your future in Andorra.

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