600,000 euros will have to be invested
In recent years, a growing number of businessmen, entrepreneurs, influencers and other professionals have established their tax residence in Andorra. The reason is caused by a lower tax burden and favorable treatment for new digital assetslike cryptocurrencies or tokens.
However, and as explained by the tax advisory and consultancy, Andorra Solutions Abast Global, establishing residence in Andorra will be more expensive as of this year, due to changes in the Immigration Law approved at the end of 2022 and that already applies this year. “Carrying out adequate financial planning and having professional advice is essential to avoid surprises and harm possible exemptions,” they warned.
New imports of deposits and investments for residents
The changes in Law 9/2012 on Immigration of the Principality of Andorra support the requirements to obtain a residence permit in Andorra. Specifically, they raise the amount of deposits and investments required by the government to obtain active and passive self-employment residence.
“After the latest amendment to the law, people who applied for active residence on their own, by setting up a company in the country, they will have to make an unpaid deposit to the Government of Andorra of 50,000 eurosinstead of the 15,000 euros that were requested up to now”, they explained from Andorra Solutions Abast Global.
Active residence is the modality designed for businessmen, entrepreneurs, professionals and investors who want to create a company and/or work in the country, since it implies the automatic obtaining of the residence permit and the work permit, if all the other requirements are met. .
For their part, applicants for a non-profit passive residence in Andorra will have to make a total investment in the Principality of Andorra of 600,000 euros, compared to the 400,000 euros required before. “For a real estate investment to be taken into account as part of the total investment, it must be in each case of at least 400,000 euros. However, if the investment is made in a housing fund promoted by the Andorran Government, the deposit it remains at 400,000 euros”, he explained.
Passive residence is designed for investors, shareholders, professionals with passive income, artists, athletes and other profiles who want to establish their tax residence in Andorra, but not work in the country. This figure allows obtaining a residence permit, although not a work permit.
Measures to stop the real estate boom in the Principality
According to Andorra Solutions Abast Global, the changes indicated in the Immigration Law they will not affect current holders of a residence permit in Andorra, in either of the two modalities. However, “they will apply to all immigration files that are submitted throughout the current year 2023.”
In this regard, from the advisory It is recommended to seek specialized advice before starting the processing of an application for tax residence in Andorra. “It is essential to choose both the type of residence appropriate to the applicant’s profile, and to carry out rigorous financial and estate planning to meet the deposit and investment requirements,” they explained.
On the other hand, after this modification of the law, the exceptions to these requirements continue to be maintained in some situations. For example, in the case of employed workers who settled in Andorra or who obtained residence in the country through the family reunification process.
It should also be taken into account that Andorra is currently experiencing a real estate “boom” due to the number of new residents. The price of real estate has come to exceed 4,000 euros per square meter, which is a relevant factor both for real estate investments and for the search for your own home.
In this sense, the Government of Andorra is implementing measures to stop the rise in housing prices, which may also affect residence applications from foreigners. For example, the Andorran parliament has recently approved legal amendments to limit the entry of new residents and control the rise in the CPI for residential rentals.
“Andorra continues to be a very attractive destination for businessmen and professionals who want to live in a safe environment with an ecosystem for entrepreneurs, taking advantage of the lower tax burden in the Principality. However, after the latest changes in the Immigration Law, appropriate advice for meet the requirements of the different modalities available and avoid surprises regarding the amounts and conditions of the deposits and investments that are required. Since the end of last year, we have received many inquiries in this regard”, explained the partner of the Andorra Solutions Abasto tax advisory Global, Patrick Mueller.