Andorra tax residents are required to pay taxes on all worldwide income, except for capital gains from the purchase and sale of real estate within Andorra, tax on wealth, gifts, inheritance, or capital gains No. In 2015 a graduated personal income tax system was established with one of the lowest tax rates in Europe.
For example, income up to EUR 24,000 is taxed at 0%, income between EUR 24,001 and EUR 40,000 is taxed at 5%, and income above EUR 40,001 is taxed at 10%. Married couples are subject to a 10% tax on income over €40,000. In addition, interest on bank deposits is taxable, but only on amounts exceeding €3,000. The capital gains tax on the sale of real estate is 15%, but the tax rate decreases each year, and you can sell it after 13 years of ownership. To become a tax resident of Andorra, you must meet certain criteria and follow certain procedures. Here’s an overview of the process:
Andorra Tax Residence Benefits
have business in Andorra It has several advantages, such as the country’s low tax burden, business-friendly regulations, and a stable economy. The well-developed infrastructure and good transport links to the rest of Europe make it a good location for businesses that need to import and export goods. Andorra also has a strong reputation for privacy and banking confidentiality. However, as Andorra is a small country, the domestic market may be limited and businesses may need to rely more on foreign customers.
On top of that, Andorra is not a member of the European Union, so businesses may need to consider the potential impact it has on trade and access to EU markets. There is a strict policy of not allowing companies, and your application may be denied if it is suspected that the main purpose is to form a company for tax avoidance.
Get tax residency
In general, there are two ways to obtain tax residency in Andorra. First, project promoters, company owners and others operating in Andorra can apply for a permit for active residence (also known as “working residence”). Principality investors can apply for passive housing, known as “non-productive and non-commercial real estate” (real estate, financial, etc.).
Second, if individuals with certain qualities and skills and a certain level of prestige (cultural, scientific, etc.), such as professionals, artists, elite sports, are granted additional tax residency permits in Andorra. there is. Let’s see the details below.
Establishing a presence in Andorra
To become a tax resident of Andorra, you must establish a physical presence in the country. This can be done by buying property, renting a residence or starting a business in Andorra.
Spend some time in Andorra
To be considered a tax resident, you must spend at least 183 days in Andorra in a calendar year. This can be done by living in the country full-time or by spending a significant portion of each year in Andorra.
Register with local government
Once you have established a physical presence and have spent the required time in Andorra, you will need to register with local authorities such as the city hall or the police station. You will need to provide proof of residency, such as a lease or purchase contract, as well as your passport or ID card.
Get NIE number
Registering with your local authority will also help you obtain a NIE number. The NIE number is a unique identification number that every tax resident in Andorra must have.
File your Andorra tax return
Once you become an Andorra tax resident, you will be required to file annual Andorran tax returns and pay taxes on your worldwide income.
You can also read the benefits of saving money for informational purposes. Even if you meet all of the above criteria, Andorra has a strict policy of not allowing tax residents for financial purposes only, and if you suspect that your main purpose is to avoid paying taxes in your home country, Please note that we may reject your application. Please consult your tax adviser or attorney to ensure full compliance with local laws and regulations in Andorra.