Many are questioning how to avoid becoming the scapegoat in light of the present COVID-19-related economic and social upheaval as well as the impending tax rises in both Spain and Latin America. Andorra is usually brought up when discussing ways to avoid excessive taxation without having to relocate to a nation where the culture is drastically different from that of Hispanics.
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Consider the savings a high earner might experience if they paid less than 10% in taxes to the Andorran government rather than over 50% in Spain. It’s amazing, isn’t it?
What is Andorra, though?
For those of you in Latin America who might not know, Andorra is a little nation in the Pyrenees that is less than three hours’ drive from Barcelona. It has long been renowned for its mountains, ski areas, retail-lined boulevards, and low crime rates.
The taxation system in the nation, however, may be its greatest draw. Hundreds of wealthy people, content producers, cyclists, youtubers, gamers, Moto GP racers, poker players, large internet marketers, traders, cryptocurrency investors, etc. have already chosen to relocate to this tiny Pyrenean nation.
And why is its tax structure so alluring?
A maximum of 10% is the personal income tax rate.
10% is the maximum corporate income tax rate.
4.5% is the amount of indirect tax, which is the same as VAT.
There is no gift, estate, or inheritance tax.
Dividends from Andorran sources are exempt*.
transferring tax exemptions.
There are no international tax transparency regulations.
The tax rate on real estate investments is quite low.
A liberal executive and liberal economy form the foundation of the tax system.
Does Andorra have financial secrecy and is it a tax haven?
Despite Andorra’s long history as a tax haven with financial secrecy, customers may nevertheless encounter unusual challenges with regard to banking compliance. Despite this, Andorra’s name has all but vanished from lists of tax havens because to its efforts, dedication to openness, and collaboration with other nations.
As a matter of fact, Andorra was taken from the OECD’s “grey list” in December 2018.
Despite still being on some internal lists of tax havens (especially in Latam), Andorra will soon have an irreproachable image thanks to the removal of banking secrecy, the rapprochement with the EU, the exclusion of harmful tax regimes, and the adoption of the BEPS Inclusive Framework. This is largely due to the diligent work that Xavier Espot’s executive has been doing lately.
How can I live in Andorra, too?
There are many various kinds of homes available today, mostly classified as active or passive.
The first type of residency, known as active residency, calls for having a permanent home in Andorra and staying there for more than 183 days annually. The police will be in charge of maintaining this permanency, and the renovation of the house is what will make it happen.
The only drawback of entering through the active way is that, for a few years, you will need to pay a 15,000€ deposit, which will be reimbursed to you as soon as you depart the nation. There is a provision, meanwhile, that exempts some occupations from paying this deposit.
Although you are certainly free to stay in Andorra for a longer period of time, the second scenario, known as passive residency, has the benefit of just requiring your presence in the Principality for at least 90 days every calendar year. The Andorran government is not currently in charge of this requirement.
Nevertheless, in order to qualify for this second type of residence, you must pay a deposit of 50,000 euros and an investment of 350,000 euros. While this may seem like a large sum, keep in mind that it is comparable to the “golden visa,” which is available for much higher sums in other European nations.
Is it safe to move to this new address?
Numerous celebrities have previously done it, including the Thyssen family, the Espargaró brothers, Maverick Viñales, TheGrefg, Patry Jordan, Natalia Cebrián, and many more. And we are confident that an increasing number will choose to follow suit, as it is a genuine option to live a few hours away from Spain and avoid their high taxes.
It goes without saying that you must have a local attorney to assist you with all entrance procedures. Depending on your assets and circumstances, you could also require assistance departing your place of origin.
Relocate&Save thinks that Andorra is a great choice for high net worth individuals who wish to live in a peaceful and secure environment, as well as for those who have short careers or are dependent on outside agents and want to save throughout their prime working years.
Can I reside in Andorra if I’m from Latin America?
Since Andorra is not a member of the EU, it will be just as simple for Latin Americans to enter as it is for EU nationals. The question is whether or whether you are approved by immigration through active or passive residency, and there shouldn’t be any obstacles in your way.
You will have unrestricted travel rights across Spain, Portugal, and France with both active and passive residence. But you have to make sure you visit Andorra for at least 183 days a year.