Laws in recent times have converted the Andorran “Passive” Residency program into one of the most secure fiscal residency packages available anywhere int he world. Gone are the primitive days of foreigners taking up residency in Andorra in order to pay 0% taxation on their pension, converted now into a dynamic system of offering fiscal security to a wider range of younger, more dynamic professionals, in turn making Andorra a far more attractive destination for world class management, entrepreneurs, leading athletes, international performing artists, and renowned scientists, doctors, artists, and many other individuals from various professional, artistic and scientific fields.
Along with the introduction of a 10% Personal Income Tax*, Andorra has also introduced the flexibility on the quantity of time a resident must be based in Andorra. Reduced now from 183 days to 90 days, and is looking to proceed with various double taxation treaties with major countries around the world, from our local neighbours in Spain and France, but also far reaching countries like the United Kingdom, Australia, and New Zealand. This will in turn allow Andorran residents to repatriate funds being held or being created abroad without the burden of excessive withholding taxes in the country of origin.
The final piece to this puzzle comes in the form that the Andorran Authorities have signed a treaty with the E.U. (after many years of pressure) to disclose information on foreign account holders. The recent regulation of the banking system has already banished questionable accounts, and is now preparing for the first time in this little nations history to disclose the effects of foreign account holders. The only way of protecting this information is by taking out residency in Andorra.
Under new laws passed on the 27th June 2012, the Andorran Government modified its immigration law governing the residency of foreigners in the Principality. The Government’s policy is now designed to encourage foreign investment into the country – a very important change that will continue the transformation of the Andorran economy for the better. It is now possible to own 100% of an Andorran company as a foreign resident.
These changes are intended to attract international business people and consultants, professionals interested in establishing companies in Andorra, those interested in engaging in commerce with or from Andorra, and wealthy retirees wishing to reside in Andorra.
The new laws also actively seek to attract the world’s best performers in the fields of Music, The Arts, Sports, Research and Development and Science by making it easier for these professionals to obtain fiscal residency in Andorra.
The Four Major Categories to obtain residency are the following;
Arts Sciences and Sports.
The Arts, Science and Sports category is focused on professional individuals who are at the top of their field, are financially self sufficient, and are not required by contract or necessity to be in any other particular location for any specific amount of time. International consultants, award-winning scientists, economists, or diplomats, marketing gurus or IT specialists can all apply under this category.
Currently there has been an influx of renowned authors, artists, operatic singers, and choreographers who have all taken up residency in this field. Authors and Artists have been motivated by the peaceful, serene and picturesque surroundings to even include Andorra in some of their works. The biggest take-up to this category of residency are the sports men and women, such as Professional Cyclists, Motorcyclists, Ski-iers, and middle and long distant runners who find the conditions for training, the high altitude and clean air, along with the flexibility of this category, to be ideal for their training and preparation.
If you would like to know more about this category, or investigate exactly what qualifications would be necessary to apply for residency under this category, or if you would like one of A.P.P.’s staff to assist you rapidly and efficiently through this process, please contact us.
The Business Category
The Business Category has been created in order for the international businessman to set up offices or headquarters in Andorra, taking advantage of the favourable fiscal regime for corporations. In this category international business hubs can be constituted as legal Andorran Companies working with an 85% international client base. A maximum of 15% of the client base or the business income could come from local clients from within Andorra.
The new laws of all three categories were only passed in June of 2012, and the devil lies in the detail. At the point of writing this, there have been delays in the processing of some of the finer points of this law, making it the most difficult of the three new processes. It would be possible for individuals who are looking to set up an enterprise in Andorra, whether it be a new commercial activity or an existing business which you would like to relocate to use this category, which has been designed under the concept of large multinational internet companies (Google, Ebay, Amazon) or large logistical, pharmaceutical or consultancy companies to take advantage of the favourable fiscal laws for companies in Andorra. At this point in time, many medical companies have already opened their doors, along with many “online” sales companies.
It should be warned, many individuals figured that it was more “cost efficient” to come to Andorra and open a company in order to obtain their passive residency via the category 2 process, however, this system has proven not to function, as when it has been discovered that there is no real commercial activity and the the “Director” of the company was spending little to no time in Andorra, these residency permits are quickly revoked.
The Government is fully aware that Category 2. is not as streamlined as it needs to be and are investigating ways to create a more agile way of creating an Andorran Company as a foreigner. If you would like to know the requisites or any recent changes to this law, please contact us.
Non Working Residency:
The Non Working Residency, otherwise known as a Passive Residency, has been the most popular way of obtaining Andorran Residency. This category is designed for those who are retired or semi-retired, and have investments or savings that allow them to live without having to work. This category in the recent years has converted into a very popular way of obtaining a tax friendly residency for those who work “online” or do not have to work from any fixed address.
The new laws passed on the 29th of June of 2012 require Non Working Residents to reside within Andorra for only 90 days, allowing travelling consultants, salespersons or representatives wide flexibility to continue working abroad whilst maintaining their primary residency in the Principality. This has also assisted a great deal with the retirees who enjoy the winter months in Andorra and spend the summer months along the idyllic Spanish Coastline, on one of the Balearic Islands or in the south of France.
Another way to acheive residency in Andorra, is taking up an active residency, where you are employed by an Andorran Company, and you participate in the active payment of Social Security payments with CASS (Caixa Andorrana de Seguritat Social). While this appears to be straight forward in theory, the Andorran Government ensure that that only highly qualified professionals be sourced from outside of Andorra’s employee pool, or in high touristic seasons, they open a quota system allowing a certain amount of international workers into Andorra to work on temporary contracts. These employees sign a mandate that they will depart from the country at the termination of their contract. This is often the case in winter, where thousands of temporary ski workers enter the country to enjoy the excellent winter conditions of Andorra
This is one of the main reasons that Andorra has a very low unemployment rate.