Residence without gainful activity
The initial authorization of residence is awarded for a period of two years. The first renewal is granted for a period of two years, the second renewal for a period of three years subsequent to a period of ten years, except nationals of Portugal, Spain and France, and countries that have signed and ratified an agreement with the Principality of Andorra.
Residence without employment (D.1.1.)You must invest a permanent and effective amount of at least €400,000 in one of the following ways:
- Real estate located in the Principality of Andorra
- Holding share capital or equity of Andorran resident companies
- Debt instruments issued by Andorran resident entities or
- Debt instruments issued by any public administration of the Principality of Andorra
- Unnumbered securities with the Andorran National Finance Institute (Institut Andorrà de Finances, INAF).
If you have not made one of the above investments prior to the residency application submission, you must make an undertaking to make such investment within six months. After that, you must provide documents proving it, otherwise your residence permit will be cancelled.
Together with the investment, the applicant must make a €50,000 non-yield deposit in the INAF. For each dependent, an additional deposit of €10,000 is required. The deposit can be deducted from the qualifying investment amount mentioned above, and is refundable when giving up the residence permit.
To renew the residence permit, you must keep the investment and you must physically reside in Andorra for a period of 90 days per calendar year, without exercising any labor or professional activity within the territory.
If you have lived in Andorra permanently for at least 20 years, or you have been a permanent resident for 10 years and have completed compulsory education within the country, you can obtain citizenship by naturalization.
- Commitment to make the investment within six months. After this period, you have to provide documents proving such investment.
- Proof of income, usually a tax return and corresponding bank statements, which must state that your annual income is higher than 300% of the annual minimum wage legislation, adding 100% for each dependent.
- Proof of clean criminal record, with a certificate from the country of origin, country of nationality and country of residence.
- Rent or acquire a residential property in Andorra, or proof that you have initiated procedures to acquire one. Which must be concluded within one year from the application submission.
- Undertaking to establish actual residence in Andorra for a minimum of 90 days per calendar year.
No nationality is officially restricted
Dual citizenship is not recognized in Andorra. To become a citizen of Andorra, you must renounce your previous nationality.
- Original and photocopy of passport
- Original Police Clearance Certificate
- Affidavit regarding criminal records
- One passport-size photo
- Proof of ownership or rental housing
- Original or Certified copy of Marriage Certificate (if applicable)
- Commitment to establish actual residence in Andorra for a minimum of 90 days per calendar year
- Evidence of Health Insurance
- Medical Certificate
- Proof of income
- Original or Certified copy of Birth Certificate (if applicable)
- Bank Statement
- Original Bank Reference Letter (Not older than 6 month)
- dual citizenship No
- Family members included Yes
- land ownership Yes
- Physical residence required Yes
- Personal visit required Yes
- Language skills required No
- Interview required No
- Investment Single €400,000
- Investment Family 4 €400,000
- Minimum annual income €35,692.20
- Time to citizenship 240
- Time to permanent residency
- Visa-free countries 166
- Financing available No
Andorra is one of the smallest countries in the world with only 468 sq. km of territory. It has a population of around 78,000 inhabitants, of whom approximately 36,000 are Andorran nationals. Andorra has a parliamentary co-principality political regime whose heads of state are the Bishop of Urgell (Spain) and the President of France.
Its capital is Andorra La Vella and its official language is Catalan, but French and Spanish are widely spoken. Although it is not part of the European Monetary Union, its official legal tender currency is the Euro (EUR).
Visa Free Travel
Becoming an Andorran resident does not automatically make you a tax resident. To be a tax resident you must spend more than 183 days per year within the country or have your center of vital/economic interests in Andorra.
Tax residents are subject to personal income tax on their worldwide profits. Non-residents are taxed on their income derived from Andorra.
The personal income standard tax rate is 10%. Annual income up to €24,000 is tax-exempt and income between €24,000 and €40,000 is taxed at a 5% rate.
Dividends received from resident entities are exempt from taxation, whereas those received from non-resident companies are taxable. Interest of bank savings are subject to the standard income tax rate, but an exemption on the first €3,000 may apply.
Capital gains are considered ordinary income and therefore subject to personal income tax. Capital gains from the transfer of immovable property are taxed separately at a progressive rate that ranges from 0% to 15%, depending on the length of time that the property has been held. Properties held for more than 12 years may be exempted from taxation.
Capital gains derived from qualifying participations, whether from Andorran or foreign companies, are usually exempt from taxation.
There are no controlled foreign companies' (CFC) regulations in Andorra. This means that profits retained in non-resident companies by a resident natural or legal person are not subject to taxation.
There is a property tax at an average of €100 per property yearly. Transfer of immovable properties between individuals is subject to a transfer tax between 1.5% and 2.5% of the purchase price.
The standard V.A.T. rate is 4.5%, though certain goods and services are taxed at reduced rates of 2.5%, 1% and 0%. Financial and banking services are subject to a 9.5% tax rate.
There are no net worth and inheritance taxes in Andorra.
Regarding corporate taxation, resident companies are subject to a 10% tax on their worldwide profits. However, companies mostly engaging in international business involving intangible assets, international trading and financial management and investment activities, may request an 80% tax base reduction.
Dividends and capital gains derived from qualified participations may be tax exempt, provided that the exclusive purpose of the company is managing interests in non-resident entities. Capital gains derived from immovable assets are subject to rates between 0% and 15%.
Dividends and interests paid to non-residents are exempt from withholding tax, whereas royalties are taxed at a 5% rate. Professional fees paid abroad are taxed at 10%.
Find out more about the Andorran tax system.
This should not be construed as tax advice. We have access to a global network of qualified attorneys and accountants who can give you the proper advice for your particular circumstances. Contact us for further information.
- Property tax Yes
- Transfer tax Yes
- Inheritance tax No
- Net worth tax No
- CFC law No
- Tax residency days 183
- Personal income tax rate 10%
- Capital Gains tax rate 15%
- Investment income tax rate 10%
- Territorial taxation No