Andorra provides significant advantages to those seeking residence, with its economic and political stability, high living standards, competitive tax regime, and security. Andorra boasts one of Europe's healthiest economies, with low unemployment. Its prosperity relies chiefly on finance and tourism. Residents can take confidence in its robust job market.
The Principality offers highly competitive personal and corporate tax rates, without capital taxes. This creates an extremely appealing base for personal wealth and business activities. Modern infrastructure, excellent education, and stunning natural beauty make Andorra extremely appealing for families seeking prosperity and lifestyle.
Andorran residence permit confers major economic, social, and lifestyle advantages that make it an exceptionally attractive destination for foreigners aiming to establish themselves in Europe.
The main ways to obtain a residence permit in Andorra
Andorran active residency through opening a local business
Those seeking Andorran residence through business incorporation may select from several entity types, each with distinct requirements and implications. Careful consideration of capital needs, liability, taxation and other factors should inform this key strategic choice. Business structures for Andorran residence:
The nation allows residence applicants multiple avenues to achieving active Andorran business residency, each permitting customisation as per operational and financial realities and outlook.
Andorran company formation
Forming a legal entity in Andorra demands meticulous adherence to established legal procedures across three key stages:
To obtain a residence permit in Andorra if there is a registered company in the country in 2024, the applicant must provide the following documentation:
- Valid passport (minimum 1 year)
- Criminal background checks for all countries inhabited for 12+ months in the past 5 years
- Proof of Andorran accommodation
- Company documents: incorporation certificate, capital verification
- Comprehensive health insurance
- Evidence of corporate role and involvement
- Family member paperwork who also plan to obtain a residence permit
While specific documentation can evolve per applicant, engaging knowledgeable immigration counsel in Andorra allows corporations and entrepreneurs to quickly overcome all bureaucratic obstacles.
Non-refundable payment and residency for family members
Obtaining active Andorran residency as a self-employed individual necessitates submitting a non-refundable €15,000 deposit with the Andorran Financial Authority. This compulsory, non-interest bearing payment, funds public infrastructure and services.
Additionally, extra deposits must be lodged for each family member also seeking residency status. After an initial three-month settled period, applicants can formally request reunification with immediate relatives.
Such candidates include spouses/partners, minor children, students financially dependent on the principal applicant and elderly dependents. Family members receive a renewable one-year residency, extendable every two years up to ten.
Thus, Andorra requires reasonable assurances of economic commitment from those obtaining residency. Meanwhile, family unity is also facilitated through reasonable administrative procedures. By meeting these straightforward conditions, applicants can fully benefit from Andorra’s advantageous environment.
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Time frame for obtaining a residence permit through the establishment of a company in Andorra
Obtaining Andorran residency through corporate formation involves two key phases: entity registration and residency approval. Applicants should anticipate the following indicative timescales:
Company registration
The creation and verification of a duly constituted Andorran enterprise typically requires around two months. This assumes the prompt submission of thoroughly prepared documentation like articles of association, financial statements, business plans and certified capital funds.
Delays may arise pending any outstanding information requests from officials. Upon satisfactorily lodging all prerequisites, the business can be legally registered.
Residency permit
With the registered entity affirmed, applicants can then submit for personal residency status in Andorra, usually processed within one month. Required documents include business authorisation evidence, passports, criminal record checks and proof of financial solvency.
Assuming a smooth process, the total endpoint-to-endpoint timeline is approximately three months. However, specific complexities or periods of high application volumes can extend decision lead times. Proactively furnishing accurate paperwork is advisable for more efficient outcomes.
Passive residency through investment
Investment in the state budget
Andorra facilitates residency without employment under ‘passive’ status, subject to financial investment and minimum stay:
This option for obtaining residence in Andorra involves an investment in the country’s economy. A baseline €600,000 investment in approved enterprises allows passive residency eligibility. However, committing €400,000 to the national Housing Fund reduces the threshold. This expanded choice lets applicants directionally target the economy/social projects.
Beneficiaries must spend at least 90 days per annum in Andorra, affirming authentic resettlement intentions, not purely tax optimization.
Passive Andorran residency demands substantial capital allocation and ongoing partial habitation in exchange for its advantages around taxation, security, and lifestyle.
Ways to confirm financial independence
Securing investor residency necessitates clear evidence of self-sufficiency and dependants’ support to minimize welfare burdens. Various instruments can substantiate applicant's financial independence:
- Bank statements. Showing adequate liquid asset holdings verifies near-term spending capacity locally. It is important that the funds be liquid, that is, easily accessible for use in Andorra.
- Investment income. Documentation around recurring revenue streams like dividends, interest, and rent establishes durable funding for local costs. These sources of income must be reliable and predictable.
- Business profits. Corporate owners can submit tax statements demonstrating consistent profitability, confirming the firm’s capability to financially uphold the applicant.
- Property assets. Real estate or other holdings shown via valuation reports signal financial independence. Asset diversity provides further assurance against insolvency risks. In some cases, financial documents submitted may need to be notarized to confirm their authenticity and reliability.
Ultimately, residency candidacy relies on proving robust finances and self-funding longevity in-country and long-term. This avoids governmental liabilities and supports Andorra’s growth interests through sustainable investor settlement.
Administrative fees and timeframes
Beyond capital commitments, Andorra levies a €2,500 administrative fee to handle review/approval procedures per investor residency application. This mandatory, non-refundable amount covers due diligence, verification and related processing overhead.
With all documentation, background checks and qualifications in order, immigration authorities typically finalize decisions within one month. This period may fluctuate based on specific circumstances and prevailing application volumes.
While sizable financial pledges provide initial residency entitlements, the strength of supplemental materials also bears significance. Records spanning financial and criminal histories must demonstrate alignment with qualification criteria. Any gaps may prompt delays or rejection if unaddressed.
Upon successfully demonstrating bona fide investor credentials and objectives, applicants acquire formal residency for a defined duration, subject to extension reviews.
Registration of a residence permit in Andorra through investment is a process that requires not only financial investments, but also careful preparation of documentation and compliance with all procedural requirements. Paying the application fee and meeting the one-month deadline for obtaining a residence permit are key aspects of this process.
Tax residency
Andorra facilitates tax residency for qualifying individuals and families, enabling integration within its economy and community. Key considerations include:
Tax residents must also maintain an Andorran business presence or other income streams, thus directly contributing through engagement. This means that persons wishing to obtain tax residency must have a business in the country or participate in economic activities, which implies active participation in the economic life of Andorra.
Spouses and children also gain access to tax residency, supporting multiple contributions.
Tax residents of Andorra are required to declare their worldwide income and can take advantage of the country's tax system, which is known for its low tax rates and transparent tax policies.
Andorra’s tax residency program incentivizes substantive resettlement supplemented by economic endeavours. By focusing on bona fide physical/fiscal presence, it attracts “quality” applicants who enhance the socio-economic fabric. Meeting well-balanced selection criteria opens extensive opportunities. Those aspiring for profound access to the global market through Andorran tax residency can consider this specialized avenue carefully.
Alternative options for obtaining a residence permit in Andorra
Beyond conventional routes, Andorra enables selective professional groups to access residency through tailored prerequisites.
For professionals with an international profile, such as content creators, obtaining a residence permit in Andorra requires that the main office or base of activity be located in Andorra. However, 85% of services must be provided abroad. This allows digital and media professionals to use Andorra as a base for their international activities while maintaining a global orientation.
Similarly, athletes and scientists with international reputations can secure Andorran residency, provided international delivery remains dominant. Freelancers must also formally join the appropriate local member association, proving internationally comparable capabilities while still demonstrating financial independence.
Shared requirements
Andorra expands its diversity by waiving generic investment obligations for niche applicants with specialized global value propositions. However, stringent checks continue safeguarding sustainable residency, upholding Andorra’s premium standards and society. This balance makes the country more vibrant and prosperous.
Andorra’s advantageous tax regime
Andorra offers one of Europe’s most business-friendly tax environments, with multiple concessions encouraging investment:
- Corporate taxation. Baseline rates span 2-10%, meaning €500K profits assumes to €10-50K tax charges. However, various rebates like 50% Year 1 reliefs for new firms, plus graduated structures for early phase enterprises (income < €100K during the first three years: 5% on income < €50K; 10% on income > €50K), alleviate liabilities.
- VAT. At just 4.5%, Andorra’s VAT-equivalent (IGI) is a regional low.neighbours. Select essential sectors like education and healthcare enjoy zero ratings, 1% for certain media resources and food products, except alcoholic beverages, 2.5% for works of art and travel agency services. Banking and financial services are taxed at a higher rate of 9.5%.
- Capital gains tax. While the default rate is a 10%, holdings in Andorran entities, over 10-year assets and minority share sales draw exemptions, unlocking capital accumulation flexibility.
- Wealth taxes. Andorra eschews annual wealth imposts widespread elsewhere. This grants major savings for high net worth entrepreneurs, letting €5M holdings avoid €100K levies seen externally.
Andorra’s incentives-oriented fiscal environment empowers enterprises. Businesses can derive immense advantage from the Principality’s global low rates and allowances if adeptly structured.
Conclusion
Andorra’s singular advantages make it a top choice for those seeking European residency. Its business-friendly ecosystem, globally competitive tax regime, unparalleled living standards, quality services landscape, and stable economy provide a potent proposition.
Our firm’s expertise facilitates progress for clients pursuing Andorra's residency access. We deliver comprehensive support across every milestone – from initial strategic advisory through documentation preparation to outcome delivery. Leveraging extensive in-country experience, our counsellors intimately understand statutory technicalities, administrative obligations and best practices. This allows process optimization respecting unique needs and priorities.
We pride ourselves on ensuring smooth transitions into Andorran life. Our individually tailored guidance simplifies relocation requirements, so clients can rapidly realize benefits in this exceptional jurisdiction. To discuss your prospects confidentially, contact our specialists.
