Andorra, nestled between France and Spain, offers a unique opportunity for those seeking a favorable tax environment and high quality of life. With a population of just 77,000 people, Andorra boasts a tax-friendly policy that attracts individuals and businesses alike.
Tax Environment
One of the key attractions of Andorra is its low tax rates. Personal taxes do not exceed 10%, and there are no wealth, inheritance, or gift taxes. The value-added tax (VAT) is approximately 4.5%, making it an appealing destination for those looking to optimize their tax obligations.
Golden Visa
For those interested in obtaining residency in Andorra, the Golden Visa program offers a pathway. To qualify, applicants must invest no less than 400,000 euros, with an additional 50,000 euros deposit required in the Andorra Institute of Finance (AFA), plus an extra 10,000 euros per dependent. This investment can be made in various forms, including Andorran bank accounts, shares in Andorran companies, real estate investments, bonds, or deposits in the AFA.
Applicants must also demonstrate an outside income exceeding the local annual minimum wage for themselves and any dependents. Processing times are relatively fast, typically taking between 2 to 4 months, and successful applicants gain access to the Schengen area without the need for a visa.
Pros and Cons of the Golden Visa
Pros include fast processing times, access to the Schengen area, a range of investment opportunities, and relatively low demand for the Golden Visa. However, cons include the requirement to spend 90 days per year in Andorra, along with a waiting period of 7 years for permanent residency and 10 years for citizenship. Dual citizenship is not permitted.
Company Formation
Setting up a company in Andorra is another avenue for obtaining residency. While this option requires a resident person director living in Andorra for the company, it offers flexibility in terms of shareholder requirements and minimum salary obligations. However, companies in Andorra are subject to a 10% tax rate, and maintaining substance is essential.
Residency Options
Active residency, obtained through company formation, requires a deposit of 50,000 USD at the national bank, while passive residency requires an investment of 550,000 EUR. Residency allows access to the Schengen area and involves costs ranging from 1000 to 1500 EUR for active residency and around 2800 EUR for passive residency.
Banking
Andorra has only three banks, which are known for their solidity but also their caution and risk aversion. While obtaining a non-resident account can be challenging, it is possible for high-net-worth individuals and large companies with a clean compliance record.
In conclusion, Andorra offers a compelling option for those seeking legal and fiscal residency in a tax-friendly environment with excellent infrastructure and healthcare. Whether through the Golden Visa program, company formation, or residency options, individuals can find a pathway to enjoy the benefits of living in this picturesque principality.
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