How to obtain residency status in Andorra?

Resident status in Andorra: features and benefits
Tax features of Andorra

The specifics of resident statuses in Andorra

The resident status in Andorra can be either active or passive, each with its own characteristics. Active status implies having permanent residence and employment in the principality, which equates the status holder to the citizens of the country. Passive status does not grant the right to work but does not limit one's stay in the territory.

Key points for obtaining resident status

One of the important factors for successfully obtaining resident status is having real estate. Some families have managed to obtain status even without owning property, but solely based on a rental agreement. This confirms the possibility of alternative paths to becoming a resident.

Peculiarities of taxation and acquisition of real estate

When purchasing real estate in Andorra, the tax is 2% of the property's value for the municipality and 2% for the government. Thus, the total tax amounts to 4%. Additionally, you need to pay for notary services (around €500). The country does not have an annual property tax, nor is there a luxury or inheritance tax.

Tax system for residents

A person who resides in Andorra for more than 183 days a year becomes a tax resident and is required to pay a 10% income tax. This is an attractive factor for investors and entrepreneurs. The tax rates provide opportunities for minimizing tax payments.

Features of taxation:Income up to €24,000 per investor per year is not subject to tax. tax. Income between €24,000 and €40,000 is taxed at 5% and above €40,000 at 10%.

Attractive conditions for residents and investors

Andorra offers favorable conditions for residents and investors, setting it apart from other European countries. Its tax system and tax incentives make this principality an attractive place to live and do business.

Preferential tax regime

The preferential tax regime in Andorra applies to both the purchase and sale of real estate, if it is used as the main residence of the owner. The tax rate depends on the length of The longer the period of ownership, the lower the tax rate. The minimum rate is only 1% if the property has been owned for more than 10 years, while the rate for less than 2 years of ownership is 14%.

Real estate investments

Real estate expert Victoria Kutuzova emphasizes that tax benefits are a significant incentive for investments in this small European country. Property prices vary depending on the type of property: two-bedroom apartments are available from €200,000, townhouses start at €350,000, and villas cost from €500,000. The purchase of real estate and resident status in Andorra is primarily determined by financial capabilities and personal preferences.

Business in Andorra

When opening a business in Andorra, entrepreneurs can choose between two main forms of companies: SL (LLC) and SA (PLC), and they can also create holding companies and funds. To register an LLC, a minimum capital of €3,000 is required, for a PLC - €60,000, and for holding companies - €120,000. Russian citizens are entitled to 100% foreign ownership in the capital of Andorran companies in any sector of the economy.

Taxes and requirements

Tax expert Denis Korolev clarifies that the corporate income tax rate is 10% for LLCs and joint-stock companies. Holding companies and funds are exempt from taxation under certain conditions. The tax on interest income and capital gains is usually charged at the VAT rate of 4.5%.

Controls and inspections

It is important to remember that the activities of Andorran companies must be genuine, not just formal. There is strict oversight from the police regarding both new and established companies. Andorra does not position itself as an offshore zone, and local banks conduct thorough analysis when opening a company.

**Conclusion:**

In general, the process of obtaining a residence permit in Andorra involves various options and conditions depending on the chosen type of residency. Owning property in the country can significantly facilitate the acquisition of a residence permit, although it is not mandatory. Residents of Andorra enjoy a favorable tax regime, which attracts investors in the real estate and business sectors. Purchasing property and obtaining residency status in the country is available for those who are willing to invest and show interest. Opening a company in Andorra also presents an attractive opportunity, considering the favorable tax regime and the possibility of owning 100% of the shares of an Andorran company for citizens of different countries. It is important to remember that the company's activities must be genuine, as Andorra is not an offshore jurisdiction and is prepared to verify this aspect at the time of registration.