The tax residence in Andorra must be distinguished from the simple residence in Andorra.
The first one implies that tax benefits can be obtained in Andorra, that is to say that a person can pay taxes in Andorra for his income obtained worldwide. This is very interesting since the fiscal residence in Andorra allows to have access to the personal income tax which currently the tax rate is 10%, with important reductions.
In this table you can see a comparison of income taxes in different countries:
What is tax residency
The tax residence in Andorra can be obtained in different ways. The most common is by residing in the Principality of Andorra (in a completely legal way and having a residence permit in Andorra) for more than 183 days a year.
It is very important to take into account that the great majority of countries understand that if you spend more than 183 days in that country, you become a tax resident in that country. This is notorious because in Andorra there is a passive residence, which allows you to benefit from the tax residence in Andorra if you spend more than 90 days a year in Andorra, however, it is very important not to spend more than 183 days a year in another country, so that you cannot be considered tax resident in that other country.
Here is a table of the average number of days you must live in Andorra to be considered a tax resident in the country.
The benefits of becoming a tax resident in Andorra
As we have already discussed, it is very convenient to make the change of residence to Andorra, since living in Andorra implies that you can become an Andorran tax resident.
Obtaining the tax residence in Andorra entails the change of tax residence (usually from countries such as Spain or France) to Andorra and therefore obtaining the residence permit in Andorra and being able to pay all taxes in Andorra.
Tax residence in Andorra is therefore synonymous with tax optimization:
In this other article you have a summary of all the taxes that exist in Andorra and the benefits of obtaining tax residency in Andorra compared to other countries.
Requirements for Andorran tax residency
There are currently different ways to obtain tax residency in Andorra.
Here are the requirements to be considered a tax resident in Andorra:
- Passive residence: meet the requirements to obtain the residence permit in the country and also reside at least more than 90 days in Andorra.
- Self-employed residence: you must meet the requirements to obtain the residence permit for self-employed and reside in the country at least 183 days a year (it is not necessary to be uninterrupted).
Dual citizenship
As of today there is no option to obtain dual nationality in Andorra.
Andorra therefore does not allow dual nationality, therefore, any person who wants to obtain the Andorran passport, must previously renounce his nationality in order to obtain the Andorran nationality.
However, it must be taken into account that the Andorran nationality (obtaining the Andorran passport) is not the same as the Andorran residence permit (it allows you to reside and pay taxes in Andorra, but not to obtain the passport).
There is a great deal of confusion on this issue and that is that the Andorran nationality is not the same as the Andorran residence permit. The Andorran passport (nationality) can be obtained by those foreigners who have resided uninterruptedly in the Principality of Andorra for 20 years and pass an exam on Andorra in order to obtain the Andorran nationality. However, they will have to renounce their nationality beforehand.
Is tax residency active or passive?
It is easy to distinguish between active and passive residence. The tax residence in Andorra can be passive or active.
To obtain the passive tax residence in Andorra, you must invest in the Principality of Andorra at least 800.000€ in real estate in the country or in financial instruments established by the immigration law. This residence, as already mentioned, requires spending at least 90 days a year in the Principality of Andorra.
The active fiscal residence in Andorra, requires that a professional activity is developed in the Principality of Andorra. In addition, a transfer of €50,000 must be made as a deposit to the Andorran Financial Authority. It also requires a minimum residence in Andorra of 183 days per year.
How long does it take to become a tax resident?
Normally, obtaining tax residency in Andorra depends on the type of tax residency you apply for.
In order to obtain tax residency you will have to fulfill the requirements to obtain one of the residence permits in the country, but it usually takes between 1 month and 3 months depending on the specific permits you choose.
Contact us if you have any doubts
If you need to change your tax residence and you have doubts about your personal or professional taxation, we are at your disposal for any questions you may have.
Contact us through our email or in a direct and agile way through our whatsapp. We are at your disposal.
