Temporary Residence Permits In Andorra

Temporary Residence Permits In Andorra

Dreaming of picturesque landscapes and a peaceful lifestyle in the heart of the Pyrenees? Securing a temporary residence permit in Andorra opens the door to experiencing the charm of this small yet enchanting principality. Don’t Worry! We’ve got your back in this!

Whether you’re drawn by its tax-friendly policies, outdoor adventures, or cultural richness, navigating the process of obtaining temporary residency is your first step towards calling Andorra home. Let’s explore the ins and outs of temporary residence permits in this hidden gem of Europe.

Let’s dive in!

What Is Residency In Andorra?

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Andorra is a fantastic place to live, with its stunning scenery, dependable healthcare, and tax system attracting thousands of investors yearly. 

But you’ll need to familiarize yourself with Andorra’s residency permits before migrating here.

The residency application process is simple and practical, much like all Andorran legislation. An active or passive residency can be chosen, depending on your needs.

Below, we’ll go over everything there is to know about Andorra’s residence possibilities, including ways to expedite your arrival.

How To Obtain Residency In Andorra?

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You’ll need a work permit approved by the Government of Andorra (Govern d’Andorra) or participate in an investor residency program to obtain residency.

Two types of investor residency programs are offered here — active and passive residency.

The residency card in Andorra is called a “residency.” It entitles an individual to reside in the principality for a certain number of years (renewable) and can lead to citizenship. 

Andorran residents have the same rights as citizens, except the right to vote. The residency can be issued in as little as two months.

Required documents for your residency application:

  • Passport copy
  • Certificate of good conduct by the local police where you hold citizenship (issued within the last three months)
  • Copy of a rental agreement
  • CV/short biography
  • Marriage certificate

Work Permit (Active Resident)

  • Total Cost: €0 (employers pay the permit)
  • Processing Time: 1-2 months
  • Income Tax: 0-10%/year
  • Renewal: 6 months > 1 year > 2 years > 5 years > 10 years > Citizenship

The Government of Andorra issues work permits for temporary and long-term residents. 

If you snag a job offer from an Andorran company, the Government will issue you a temporary work permit for six months, after which you can get a full-time resident card.

Work Permit Requirements And Qualifications

The Government of Andorra prioritizes its citizens first, then those of Spain, France, and Portugal when issuing work permits. 

If your employer can’t find employees from these countries first, they will only be authorized to hire international labor.

The requirements for acquiring residency in the principality through work permits include:

  • Job offer from an Andorran company
  • Proof of accommodation in Andorra
  • Application form (there are quotas on annual permits)
  • Administrative fees (paid by the employer)

Investment Program A (Passive Resident)

  • Total Cost: €600,000
  • Processing Time: 1-2 months
  • Residency Requirement: 90+ days a year
  • Income Tax: 10% over the first €24 000 earnt*
  • Renewal: 2 years > 2 years > 3 years > 3 years> 10 years

The Investment Program A or Passive Residency has long been one of the most popular of the Residency Categories due to the flexibility it allows the holder to spend extended time outside of Andorra and still declare tax within Andorra.

Due to this Category’s impact on the social fabric of Andorran Society, the Government passed a law on the 22nd of December 2022 to increase the minimum Investment required for this Category. 

Along with the pricing that the Immigration Department will charge for this Category.

The minimum total Investment for this Category is €600,000, consisting of an investment of €552,500 and a Non-Interest Bearing Deposit into the AFA (Andorran Central Bank) of €48,500

The immigration department will charge €2,500 for the first person and €500.00 for each subsequent person on the same application.

For example, a husband and wife plus two children will now cost €4,000 in immigration costs to obtain this residency category.

It should also be noted that each family member in the same application must pay an additional €9500.00 into the AFA account. 

This €9,500.00, in turn, is reduced from the overall Investment required for this Residency Category, so that at all times, the minimum amount needed for the applicant to pay for this category Deposit + Investment is €600,000.

The Investment can be made a maximum of 6 months after obtaining the Passive Residency Cards. 

This way, the applicant knows their application is successful before making the Investment.

The Investment can be made towards Property, an Andorran Bank Held Investment Portfolio, Andorran Sovereign Debt, Shares in a Public Andorran Company, or Insurance Instruments held in the country.

Investment Program B (Passive Resident)

  • Total Cost: €60,000+
  • Processing Time: 3-6 months
  • Residency Requirement: 90+ days a year
  • Income Tax: 0%
  • Renewal: 2 years > 2 years > 3 years > 10 years > Citizenship

The B resident program is an investment residency for entrepreneurs who wish to conduct international business while residing passively in Andorra. 

You’ll have to register a business in Andorra; more than 85% of the business activity will be conducted outside Andorran’s territory.

The corporate tax rate on such businesses will be 2% because their company doesn’t buy or sell on Andorran territory.

To qualify for residency B, you must meet the following criteria:

Proof of self-sufficiency. Like the Category A requirement, you must have a balance exceeding 300% of the Andorran annual minimum wage. 

This amount is currently €38,160+, and the money can be allocated to meet the bond requirement for this residency.

A bond payment of €50,000 to the Andorran National Institute of Finance (INAF). This bond will qualify you for the residency and is refundable if you give up your residency.

Business office. The business must have an Andorran office space of at least 20 m2 (200 square feet) to satisfy the minimal office requirement.

Business plan. The business plan must outline the course of action for the next three years and include your CV and biography.

The total Cost for this residency can be only €50,000 + the Cost of office rental (20m2 can be rented for €400-500/month). You will need a minimum of €60,000 in the first year with all fees included.

Residents themselves don’t pay any income tax on a B-category residence permit, but the company is subject to a 2% corporate tax rate.

Investment Program C (Athletes, Scientists, Artists, etc.)

  • Total Cost: €50,000+
  • Processing Time: 3-6 months
  • Residency Requirement: 90+ days a year
  • Income Tax: 0%
  • Renewal: 2 years > 2 years > 3 years > 10 years > Citizenship

The C residency is available to people who are recognized globally and can prove their ability in the scientific, cultural, or athletic fields. 

The requirements are similar to a B residence visa, but you won’t have to write a business plan to get the residency.

Apart from the government bond of €50,000, there is no requirement for any other investments in this program. 

Nevertheless, you must meet the minimum requirements, such as a bank account balance that surpasses €38,160.

All revenue-generating activities must be conducted outside of Andorra since the applicants also qualify for the 0% tax exemption.

Self-Employment Program D (Active Resident)

  • Total Cost: €15,000+
  • Processing Time: 3-6 months
  • Residency Requirements: 183+ days a year
  • Income Tax: 0-10%/year
  • Renewal: 1 year > 2 years > 2 years > 5 years > 10 years > Citizenship

The D investment program is an active residency for entrepreneurs who want to take up full-time residence in the principality for more than six months a year.

If you plan to work and live in Andorra, this residency has minimal investment requirements, and you will be subject to the standard Andorran income tax, which is 10% on all income exceeding €40,000/year.

We recommend this residency to international entrepreneurs such as digital marketers, traders, programmers, designers, and other self-employed entrepreneurs living in Andorra for the long term.

To qualify for a D residency, the following requirements apply:

  • Form an Andorran company.
  • Spend six months in the country every year (183+ days).
  • Deposit a €15,000 payment in a government bond. This deposit is refundable if you give up your residency.

This program does not require a business plan, but you must own a company in Andorra before applying for this residency.

The process can take longer than three months since you’ll have to set up an Andorran company prior. 

The main advantage is that you can only pay a €15,000 bond compared to the €50,000 bond requirement on passive residency options.

Residents on a D visa are subject to Andorran income taxes because they reside in the country full-time. The maximum income tax rate for D residency holders is 10%.

What Are Requirements For Residency In Andorra?

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We can assist you in getting the necessary documentation to ensure your application is accepted. Converting the documentation into Catalan is required. 

For each of the previously listed residency kinds, the following prerequisites must be met:

  • Criminal Background Check: You are responsible for demonstrating that you have no criminal history in your home country and that no investigations are still pending against you. Police records are required for all applications.
  • Health Insurance: Before becoming qualified for public health insurance after moving into the principality, the applicant must acquire private health insurance in Andorra.
  • Bank Certificates: Demonstrating self-sufficiency is the primary criterion for a residency permit. The Andorran Government calculates this by multiplying the minimum yearly salary by three. A €38,000 bank balance is required for all passive residences. If you have any, you must provide proof of €5,000 additional for each dependent. The only exemption is for D active residencies, which are allowed to operate in Andorra without providing proof of income.
  • Age Requirements: The primary applicant has to be over 18 years old.
  • Address: An address in Andorra is required for any residency, including work permits. It would help if you offered verification of your accommodations. This could be a short-term rental agreement or a piece of real estate you recently purchased.

What Is Acquiring Andorra Residency Like?

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Residency processing times vary depending on the program. Purchasing a house that entitles you to an A-type residency could take one to two months.

Similarly, establishing a firm granting B residence might take five weeks. The majority of residency processes take three to six months to finish.

What Are The Taxes When Living As A Residence In Andorra?

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Taxes in Andorra are among the lowest and most attractive in Europe, which makes the country an ideal destination for many residents and investors. The central taxes paid in Andorra are:

  • Personal Income Tax (IRPF): is levied on income earned by tax residents in Andorra. The maximum rate is 10%, but there is a minimum exemption of 24,000 euros and a 50% rebate for income between 24,000 and 40,000 euros. Non-residents are only taxed on income obtained in Andorra at a rate of 10%.
  • Corporate Income Tax (IS): levied on the profits of companies and legal entities domiciled in Andorra. The general rate is 10% but can be reduced to 2% for activities of national interest or 0% for holding companies. There are also exemptions to avoid double taxation and special regimes for new companies.
  • General Indirect Tax (IGI) is the equivalent of VAT in other countries. It is a consumption tax levied on selling goods and services in Andorra. The general rate is 4.5%, but other reduced rates are 0%, 1%, 2.5%, and 9.5%, depending on the product or service taxed.
  • Real Estate Capital Gains Tax: levied on the increase in value obtained from the transfer of real estate located in Andorra. The rate varies according to the time the property has been owned, e.g., 15% if sold within one year.

Requirements To Be A Tax Resident In Andorra

There are some general conditions that anyone wishing to live in Andorra must fulfill, regardless of the type of residence:

  • Be of legal age
  • Not have a criminal record
  • Have accommodation in the country (rental contract or title deed)
  • Residence in the Principality of Andorra for a minimum period
  • Pay a deposit of between 15,000 and 50,000 euros.
  • Undergo a medical examination.

Can You Get Citizenship After A Temporary Residence?

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Citizenship in Andorra is challenging, but residents are eligible for naturalization if they’ve resided in the principality for 20 years. 

This period is reduced to 10 years if they graduated from an Andorran university or three years if they were married to an Andorran national.

The application is conducted in Catalan, and the individuals pass a basic test on Andorran’s history and geography.

Andorran citizenship can be obtained in the following ways:

  • Origin: If a child is born in Andorra, they can obtain citizenship in Andorra as long as their parents were citizens of the country at birth. If their parents weren’t citizens, the child could naturalize after ten years of residency in the country.
  • Naturalization: Naturalisation is possible after 20 years of residence, 10 years for Andorran university graduates, and three years for residents married to Andorran nationals. 

Naturalization is also available for passive residents who only resided 90 days a year in the principality over 20 years.

Conclusion

Obtaining a temporary residence permit in Andorra is not just about legal formalities—it’s about embarking on a new chapter filled with opportunities and serenity. With your permit in hand, you can immerse yourself in the beauty of Andorra’s mountains, embrace its unique culture, and build a life you’ve always dreamed of.

Seize the chance to make Andorra your temporary home and discover the endless possibilities that await you in this hidden paradise.

Andorra Escape!

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