Working as a Self-Employed in Andorra 2022, requirements and fees

Being self-employed in Andorra, i.e. working on your own account, are those who carry out business or professional activities independently or with a company or through a business.

The requirements for self-employment in Andorra differ according to your work activities and education. A residence permit for a self-employed person in Andorra can be obtained by following the steps explained in the following article.

The benefits of being self-employed in Andorra

Remote work and freelancers continue to grow today.

After the Pandemic that started in 2019, companies became more flexible and people committed to telecommuting and being able to develop their work remotely.

Since then, many freelancers have settled in Andorra to work remotely due to the wide variety of benefits they offer versus neighboring nations.

Being Self-Employed in Andorra

Andorra’s independence is attractive. In addition to its tax system.

Andorra has the highest per capita income in the world. But in practice this means that you must be a resident and spend 183 days a year.

The Spanish tax authorities no longer consider Andorra a tax haven for Spain since 2011, although we commented in another article.

Andorra was removed from the blacklist by the Organization for Economic and Social Development in 2018 and therefore ceased to be considered in the OECD tax haven.

The Andorran tax administration agreed in 2011 that the countries could exchange tax information between the two countries.

Now, due to this change, many Spanish, French and other businessmen have changed their tax residence to Andorra. And this is mainly to be able to obtain the tax benefits offered by the Principality.

Being self-employed in Andorra means being able to obtain the tax benefits of the tax system in Andorra and thus be able to pay a lower rate of corporate tax in Andorra or personal income tax in the country.

Requirements to be Self-Employed in Andorra

If someone is looking at all the youtubers living in Andorra, one of the biggest questions is whether they are self-employed in Andorra and if there is this direct figure in the country.

There is the figure of self-employed in Andorra, but in order to apply you must be a resident in Andorra prior to such application.

A self-employed person in Spain who wants to become self-employed in Andorra needs first to incorporate a company in Andorra and apply for self-employed residency, as this is required by the immigration law in Andorra.

Therefore, one must choose the option of incorporating a company in Andorra in order to apply for residency in Andorra and thus be able to obtain permission to be taxed in Andorra and thus benefit from the low taxes in Andorra.

However, as we will discuss later, it is not necessary to set up a company if you have a qualified profession. You will also not have to pay the current 15K€ as a deposit at the Andorran Financial Authority (AFA).

Can a self-employed person in Andorra apply for family reunification?

At this point we must take into account that when we say self-employed we refer both to the one who has only a business through previous residence in Andorra or a qualified profession, but also to the one who has constituted a company in Andorra.

If you are looking for a prolonged stay in the Principality of Andorra, you will need a self-employment authorization.

It is possible with this self-employed residence to apply for the reunification of family members. The Andorran administration establishes that an Andorran self-employed family wishing to regroup their family members can do so.

However, in order to be able to do so, the Andorran administration establishes that the self-employed person in Andorra can prove that he/she can support his/her family economically.

Therefore, it will be necessary for the self-employed in Andorra to be able to demonstrate this minimum salary for X family members in order to be able to regroup his family members in Andorra.

These economic requirements are the most important at present, because Andorra is a small country and cannot afford to pay the health care costs for foreign citizens, for example.

What economic activity can a self-employed person carry out in the Principality?

Any person can register an economic activity in the Principality. However, it is important to note that in order to be self-employed in Andorra, one must first be a resident of Andorra. At that moment, you will be able to apply for the opening of a business and therefore be self-employed in Andorra.

Another way to be self-employed in Andorra is through the qualified profession, this is a special type of self-employed in Andorra as it requires to have a university degree and homologate it previously to be able to apply for this type of residence through the qualified profession and thus become self-employed in Andorra.

The Andorran government has imposed an absolute maximum number of professional positions. Quotas are regulated according to the applications received and the evolution of the economy during a given year. Documents submitted in this manner cannot be automatically accepted or rejected by anyone. Each file must be carefully reviewed and a professional’s application may be rejected by an Andorran professional association, which must first approve the profession.

What does a self-employed person pay in Andorra? Self-employment tax in Andorra

At this point it is important to take into account that if you are self-employed in Andorra through the titled profession, you will also have to pay for the homologation of the university degree in Andorra.

This does not fall within the self-employment fee in Andorra, but it should be taken into account as they are previous expenses that you will have to face. This process usually costs between 700 and 1.000€ (taking into account lawyers and formalities).

On the other hand, both the self-employed in Andorra who have entered through the titled profession, as well as those who do not have a titled profession, but have a company in the country and are administrators/directors of the same one or simply are self-employed in Andorra to be able to obtain a business, will have to pay monthly the self-employed fee in Andorra.

Generally the fees vary between 400 and 600 euros. These fees do not apply to independent employees, but to professional activities.

In this other article we detail more about how much a freelancer pays in Andorra.

Self-Employed by Qualified Profession – active self-employed residence in Andorra

In order to become self-employed in Andorra through the qualified profession, it is first necessary to have your university degree approved in order to obtain a permit from the Andorran Ministry of Education.

The approval of qualified professionals is not simply a requirement to obtain a residence permit in Andorra.

This process is separate and can be carried out simultaneously.

A feature for applying for a residency through a qualification is the lack of need to pay the 15,000 deposit.

This is a requirement for those whose direct application is for an individual account – active resident.

Other advantages are the generally simpler tax management than in companies.

This is because it is much quicker and less costly as there is no need to create a company in Andorra and therefore no need to go through any notary in Andorra, you will simply have to do the relevant formalities with the Andorran Government.

This way is therefore faster and simpler and at the same time more economical.

What is understood in Andorra by a qualified profession?

Andorra understands that a qualified profession is one that can only be carried out by a person who holds a university degree from Andorra or from another country and that can be approved in Andorra.

The law considers that the individual can have a qualified profession if he/she has the necessary knowledge and skills in a given discipline. The university degree or higher education degree can be obtained by an Andorran educational institution.

These university degrees allow you to carry out your profession in Andorra without the need to transfer the 15K€ to the Andorran Financial Authority (AFA), therefore to obtain the residence permit in Andorra you will not have to make this deposit and you will be able to develop your profession without any problem in the country.

Requirements to obtain the Qualified Profession authorization for self-employment in Andorra.

Foreign citizens seeking employment in Andorra must obtain a degree approved by the Public Administration or through diplomatic channels in some cases may require translation.

The types of legalization are important to know at the beginning which type corresponds to them, depending on the origin of the documents.

Therefore it is very important to have the university degree apostilled or duly legalized.

Once the degree has been homologated, it is necessary to proceed to the opening of a business in Andorra, as well as to the application for the residence permit in the country for a qualified profession. It will be at the moment of having everything 100% operative, when one proceeds to the monthly payment of the quota of self-employed in Andorra.

How much does a self-employed person pay in Andorra – Self-Employment Fee

After obtaining the homologation for the titled profession, having an active trade and having a residence permit in Andorra it is time to determine the amount to be paid.

Actively living in the Principality and working independently has to contribute to the Australian social security system (CASS).

The rates are the same for a business management position – that is, for an administrator or director of a company in Andorra.

This amounts to approximately 460 euros per month approximately. Different professionals have different tax advantages depending on their income and specific characteristics. In addition, the taxation is the IGI (General Indirect Tax). It is 4.5%.

What will I be entitled to with the payment of this self-employment fee?

Your main benefit is related to health and retirement.

In Andorra, health care is paid by co-payment.

Therefore, a general government assumes a total of 75% of the health care expenses, while the patient will have to pay the remaining 25% – the rest includes hospital expenses.

It should also be noted that Andorra has agreements with Spain and France as far as social security is concerned.

In addition, in the Principality, private insurers cover this 25 percent that a patient must bear to treat this condition.

What is the Caixa Andorrana de Seguretat Social (CASS) card?

This popular CASS-Card is obtained when a resident already has a green card.

It is understood that in order for medical bills to be reimbursed for visits to doctors, this card must be presented beforehand at the doctor’s office.

If you do not have the card at that time, you will be able to use the yellow CASS sheets, which you will have to deposit later at any pharmacy to be reimbursed the specific amount.

This card is only obtained by persons formally residing in the Principality of Andorra.

What if I want full health coverage?

It is possible to obtain a private supplemental insurance program to cover health care costs if you do not include Social Security, for example 25% of the total cost.

We have a good reputation in the health care industry for taking care of medical bills for patients. There are different insurers in the Principality that can provide direct coverage for this 25%.

We recommend going directly to the insurers and not going through intermediaries as the prices tend to be more competitive.

Are youtubers self-employed? How much does a self-employed person pay in Andorra?

Youtubers are self-employed and at the same time entrepreneurs, since the structure they need if they are not residents in Andorra is that of a company and not a trade.

Because being a youtuber does not have a university degree, they cannot obtain residency through the titled profession as, for example, a computer programmer could.

Thus, in order to gain access to the country they will need to incorporate a company in Andorra and pay social security contributions not as a self-employed person but as a director of a newly created Andorran company.

This means that they will pay the «self-employed» fee as it is the same in all cases.

Furthermore, although most are qualified and can be employed in this field, this is not correct, as their main activity generates money from YouTube and social networking websites. In this case, youtubers can only file tax returns for Andorra if they form an Andorran company instead of being self-employed.

Incorporate a company in Andorra

On the other hand, if for example you are a youtuber or if your profession does not fit into any titled profession or you cannot fit into the self-employed regime, there is the possibility to create a company in Andorra directly.

Setting up a company in Andorra involves at least 3 months of paperwork with the Andorran government.

This is important to take into account at the moment of starting the procedures and to be able to fit it with being a tax resident that same year in Andorra. This is one of the most important points to be able to obtain the tax benefits of Andorra.

You will also have to take into account all the documents you will need whether you are from Spain, France or other countries.

We explain in this other article all the necessary information to incorporate a company in Andorra, to be able to obtain the tax benefits and develop your professional activity without any problem in the country.

Conclusion

In summary: The qualification system in Andorra is limited to specific qualified professional positions: lawyers, architects, nurses and doctors. Another disadvantage of this system is that it only allows the economic activity provided by the qualifications, and is not flexible to various social objects. Therefore, it has advantages, but it is not for everyone, as its name suggests.

Contact us if you want to be self-employed in Andorra

If you need help about being self-employed in Andorra, about the fee you must pay, about one or more procedures you must carry out before the government, about how to be a qualified professional in Andorra, etc. do not hesitate to contact us through our direct whatsapp or through our email.

We will be happy to solve your initial doubts so you can develop your professional activity from Andorra without any problem.

In our previous article we were talking about the famous message that many Spaniards have received in recent days from the Tax Agency, kindly reminding taxpayers that they were aware that they had cryptocurrencies and that they had to declare them.

However, there was no further information in this message, neither in which cases cryptocurrencies should be declared nor in which cases they should not. Because yes, there are cases in which even if you have cryptocurrencies you do not have to declare them to the Tax Agency.

That is why we have decided to present this guide so that you do not have any doubts about what you have to do (and if you do, contact us so we can help you).

What do I have to declare?

As of today there is no specific regulation in relation to cryptocurrencies, but there are binding consultations that give us certain guidelines in this regard that we must follow.

Thus, if during the year 2020 you have had profits trading with cryptocurrencies, we are sorry to tell you that these profits, called capital gains, must be declared in your income tax return.

We recommend you to use programs such as CoinTracker so that you can keep an up-to-date accounting of your crypto gains and losses. This type of program allows you to obtain annual reports that you can submit together with your income tax return or you can use it directly to know how much you have to declare.

Therefore, if during the last year you have made movements with your cryptocurrencies and you have obtained profits, you have to declare it in your personal income tax return in the section of EQUITY GAINS.

How are the profits obtained from cryptocurrencies taxed?

Let’s take an example, let’s imagine that you have earned this year 150,000€ trading with different cryptocurrencies.

According to the table established by the Tax Agency, your profits will be taxed as follows:

The first €6,000 will be taxed at a rate of 19%: So you will pay €1,140.

The following 44.000€ will be taxed at a rate of 21%: So you will pay 9.240€.

Finally, the surplus, i.e. the remaining €100,000 will pay 23%: Which makes €23,000.

If we add the above amounts, we have that for profits obtained by trading with cryptocurrencies of 150.000€ we will have to pay to the Spanish tax authorities the total amount of 33.380€. So your real profit after taxes would be €116,620.

Now, to make it simple, we want to compare what you pay in Spain with what you would really pay in Andorra if you were a tax resident in the Principality.

Obtaining the same benefits: 150.000€.

The Andorran law in question establishes that on these profits, the first 3.000€ are completely exempt (unlike Spain, where you pay from the first euro of profit) and the rest will be taxed at a fixed rate of 10%.

So doing numbers: 150.000€- 3.000€= 147.000€. 147.000€ *10%= 14.700€ is the total amount that you will pay in taxes in Andorra (more than half of the amount that is taxed in Spain). Thus being €135,300 your real profit after tax.

What do I not have to declare in my Personal Income Tax?

This is simple, the simple holding of cryptos is not taxed. And for the same reason these cryptos should not be declared in your income tax return.

What about the 720 model?

This model was not created to declare cryptocurrencies, in fact as there is still no specific legislation on crypto, this model is not a 100% suitable model to declare this type of assets.

Specifically, this model establishes that we will have to report assets and rights located abroad, such as:

• Accounts located abroad opened in entities engaged in banking or credit traffic.
• Titles, assets, securities or rights representing the capital stock, equity or patrimony of entities.
• Life annuities.
• Real estate and rights over real estate.

But what about cryptocurrencies, are they included in these examples? It was not clear.

One of the last measures approved by the Council of Ministers is the Draft Law of measures to prevent and fight against tax fraud where this obliges to declare cryptocurrencies in the 720 model if the value of the same exceeds 50,000€.

The presentation of this model is done telematically and be very careful because the deadline to present this model was March 31, 2021 (it is preferable that you present it even if it is out of time) although it is likely that you will face some penalty.

Penalties for not declaring Cryptocurrencies

The previous Draft also establishes the possible penalties that may be incurred by those taxpayers who do not declare their cryptocurrencies in the 720 model:

The same amount will be applied if «in the case of non-compliance with the obligation to report on securities, assets, securities, rights, insurance and income deposited, managed or obtained abroad referring to each asset individually considered according to its class, which should have been included in the declaration or had been provided incompletely, inaccurately or falsely, with a minimum of 10,000 euros».

There will also be penalties when the delivery of information related to cryptocurrencies in portfolio is delayed. «The penalty will be 100 euros for each data or set of data referring to each asset item individually considered according to its class, with a minimum of 1,500 euros, when the declaration has been submitted after the deadline without prior requirement of the Tax Administration.» […]

Now, for those who do not correctly declare the amount earned in their income tax returns, the penalties established are usually 26% of what has not been paid.

Finally, if you voluntarily make a complementary declaration, declaring your earnings out of time, you will have a surcharge of 5, 10, 15 or 20%.