Residing in Andorra offers a series of benefits and advantages, especially attractive for certain profiles such as entrepreneurs, athletes, and people looking for a quiet and safe lifestyle. Some of the main benefits are detailed below:
<ol>
<li> Tax Benefits</li>
</ol>
Undoubtedly, one of the main advantages of residing in the Principality of Andorra is its tax regime, which is clearly among the best in Europe. By way of summary:
&#8211;          Corporate Income Tax: 10%
&#8211;          Personal Income Tax: 10% (exemption for the first 24,000 euros)
&#8211;          General Indirect Tax: 4.5%
&#8211;          Inheritance tax: none
&#8211;          Wealth Tax: none
Recently, the Government of Andorra has established a new tax on foreign investors in real estate transactions in Andorra and which will range between 3 and 10% of the real value of the property or similar transaction (companies with real estate in Andorra). The applicable tax rate will depend on the number of properties or the type of operator in the real estate market. In any case, this tax does not apply to individuals or companies with residence in the Principality of Andorra.
<ol start="2">
<li> Obtaining residency in Andorra</li>
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At Lemon Economists we advise and facilitate our clients the procedures to be carried out when obtaining a residence permit. Below, we detail the different types of residences and the main requirements:
<ol>
<li>a) Active residences allow you to live and work in the Principality of Andorra. To obtain it, it will be necessary to process and obtain a temporary or permanent residence permit:</li>
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&#8211;          On your own:
<ul>
<li>as a professional (prior residence and work permit conditioned by obtaining a liberal professional authorization, among other requirements)</li>
<li>through a company (incorporation of a company with prior authorisation of foreign investment, being a director of the company, having a stake of more than 34%, deposit with the Andorra Financial Authority an amount of 50,000 euros.</li>
</ul>
&#8211;          employed, where there are different types
<ul>
<li>Residence and work through an employment contract with an Andorran company</li>
<li>Border work</li>
<li>Permit for young people with a work option</li>
<li>Other</li>
</ul>
<ol>
<li>b) Passive residences are those that allow residence in the Principality, without exercising a professional activity. There are different permits with different requirements:</li>
</ol>
<ul>
<li>Non-lucrative residence (an investment in Andorran assets of 600,000 euros, a deposit with the AFA, a minimum residence of 90 days in Andorra, not exercising any professional activity, etc.)</li>
<li>Residence permit for professionals with international projection, for reasons of scientific, cultural or sporting interest.</li>
<li>Residence permit for family reunification.</li>
<li>Residence for digital nomads.</li>
<li>Residency for foreign entrepreneurs. For people who participate in the foreign entrepreneur program.</li>
</ul>
3.- Financial system
Andorra&#8217;s financial system has undergone a significant transformation in recent decades, especially following the reforms implemented to align with international standards in terms of transparency and regulation. Below, I detail the current situation of the Andorran financial system:
Since 2011, it has signed tax information exchange agreements with numerous countries and has aligned itself with European and international transparency regulations, including the adoption of the OECD&#8217;s CRS (Common Reporting Standard). In 2018, Andorra was removed from the European Union&#8217;s list of tax havens after implementing reforms that improved transparency and compliance with international standards.
The banking sector is one of the pillars of the Andorran financial system. The country has several banks that have managed to maintain solvency and stability over time. These banks are highly capitalized and offer services both domestically and internationally. In recent years, the banking sector has seen a process of consolidation, where some entities have merged their operations to strengthen themselves in a more competitive and regulated environment.
According to Andorra Banking, the financial system is one of the main pillars of the Andorran economy. Together with the insurance sector, they contribute to 13% of GDP and reach 19% if the indirect contribution of the sector is taken into account*. The Andorran banking sector is made up of a total of three banking groups and has more than 90 years of experience in this activity. The main business areas of the banks are commercial banking, private banking and asset management and insurance, and they are regulated and supervised by the Andorran Financial Authority (AFA), the Andorran Financial Intelligence Unit (UIFAND) and the State Agency for the Resolution of Banking Entities (AREB).
Andorran banks have obtained a profit of 163 million in 2023, a figure 44% higher than the previous year. The total resources managed reached the figure of 74,187 million euros, 16% higher than in 2022. The financial profitability of the entities, measured with the ROE, presents a consolidated figure of 10.38% in 2023. For its part, the CET1 solvency ratio (Regulatory) is 17.00% as of December 31, 2023 (according to Basel III), above the European average.
Andorra has sought to diversify its financial offer beyond traditional banking, promoting sectors such as wealth management, insurance, and financial services at an international level. This has made it possible to attract new types of investors and customers. Andorra is exploring technological innovation, fintech and crypto services as areas of growth, seeking to position itself as a hub for financial technologies in the region.
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<li> Safety and Quality of Life</li>
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Safety: Andorra is one of the safest countries in the world, with extremely low crime rates.
Health: The Andorran health system is of high quality, with access to advanced medical services and a system that combines public and private services.
Education: The country offers a trilingual education system (Catalan, French, and Spanish), with quality public and private education options.
Fresh Air and Nature: Andorra is a country surrounded by mountains and nature, ideal for those who enjoy a natural environment and outdoor activities such as skiing, hiking, and cycling.
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<li> Political and Economic Stability</li>
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Stability: Andorra is a country with high political and economic stability, which offers a safe environment to reside and do business.
Low Unemployment: Unemployment rates in Andorra are low, and the country offers a stable and growing labor market.
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<li> Business Opportunities</li>
</ol>
Ease of Doing Business: Andorra has simplified the procedures for the creation of companies, becoming an attractive destination for entrepreneurs and businessmen.
Innovation and Technology: The country is encouraging the development of sectors such as technology and innovation, offering opportunities for companies and professionals in these fields.
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<li> Proximity to big cities</li>
</ol>
Geographical Location: Andorra is strategically located between France and Spain, making it easy to access large cities such as Barcelona and Toulouse, and is a few hours away via good road connections.
<ol start="8">
<li>Lifestyle</li>
</ol>
Tranquility: Andorra offers a relaxed lifestyle free of the stress of big cities, ideal for those looking for a quieter environment to live in.
International Community: Although it is a small country, Andorra has a diverse international community, which facilitates the integration of foreign residents.
<ol start="9">
<li> Weather and Sports Activities</li>
</ol>
Mountain Climate: With cold winters and mild summers, Andorra is perfect for winter sports lovers. The ski resorts in Andorra are of the highest level.
Sporting Events: Andorra is also a destination for high-level sporting events, such as ski and cycling competitions.

Advantages of Andorra

At Lemon Economists we provide services to our clients (individuals or legal entities) so that they comply with their corporate, tax and regulatory compliance obligations, which are mainly included in the following legal framework:
<ul>
<li>Llei 20/2007, del 18 d&#8217;octubre, de societats anònimes i de responsabilitat limitada</li>
<li>Llei 30/2007, del 20 de desembre, de la comptabilitat dels empresaris</li>
<li>Decret 120/2022, del 30-3-2022, pel qual s’aprova el pla general de comptabilitat</li>
<li>Decret 119/2022, del 30-3-2022, de modificació del Decret del 9-6-2010 d’aprovació del Reglament del Registre de Dipòsit de Comptes.</li>
<li>Llei 95/2010 de l’impost sobre societats</li>
<li>Llei 11/2012 de l’impost general indirecte</li>
<li>Llei 5/2014 de l’impost sobre la renda de les persones físiques</li>
<li>Llei 94/2010 de l’impost sobre la renda dels no residents fiscals</li>
<li>Llei 5/2023 de 19 de gener de 2023, de mesures per a la reforma de la imposició directa i de la modificació d’altres normes tributàries i duaneres</li>
<li>Llei 14/2017 de prevenció i lluita contra el blanqueig de capitals i el finançament del terrorisme</li>
<li>Llei 29 2021, del 28 d’octubre, qualificada de protecció de dades personals</li>
<li>Llei 6/2022, del 31 de març, per a l’aplicació efectiva del dret a la igualtat de tracte i d’oportunitats i a la no-discriminació entre dones i homes</li>
<li>Llei 31/2018 de relacions laborals</li>
<li>Llei 10/2024, del 27 de maig, d’auditoria de comptes del Principat d’Andorra</li>
</ul>

Andorran regulation

At Lemon Economists we provide services to our clients (individuals or legal entities) so that they comply, among others, with the following obligations required by Andorran regulations:  
<ul>
<li>Have a minute book (shareholders and administrators)</li>
<li>Have a membership register</li>
<li>Have a record of effective benefits</li>
<li>Have minimum accounting and auxiliary records</li>
<li>Prepare annual accounts and deposit them electronically with the public administration
<ul>
<li>The annual accounts must be prepared and deposited by all entrepreneurs who are legal persons, and also those individuals who carry out an economic activity that has a turnover of more than 150,000 euros.</li>
<li>The deposit of annual accounts must be submitted electronically through the Tax Administration&#8217;s virtual office.</li>
</ul>
</li>
<li>Comply with tax obligations, including:
<ul>
<li>Corporate Income Tax (IS): Tax rate of 10%, to be filed electronically before 31 July of the year at the end of the tax period. Additionally, subject to different tax exemptions and deductions. It is submitted electronically together with the annual accounts.</li>
<li>Personal Income Tax (IRPF): Tax rate of 10%, to be filed electronically before 30 September of the year following the end of the tax period. For income from work and economic activities, the first 24,000 euros are exempt and income between 24,000 and 40,000 euros are available for a 50% discount. On the other hand, savings income has an exemption on the first 3,000 euros. Additionally, subject to different tax exemptions and deductions. In addition, for economic activities, a simplified regime can be chosen depending on the activity and turnover of the obligated entity.</li>
<li>Non-Resident Income Tax (IRNR): Quarterly Presentation</li>
<li>General Indirect Tax (IGI): Monthly, quarterly or semi-annual presentation depending on the volume of turnover. It should be noted that obliged entities with a turnover of less than 40,000 euros will be exempt, and those obliged entities with a turnover of less than 100,000 euros may join the simplified regime. The general rate is 4.5%, although there are other rates (0%, reduced by 1%, banking services by 9.5%).</li>
<li>Social Security Contributions (CASS): The general social security scheme for employees corresponds to a contribution of 22%, of which 6.5% is withheld from the worker&#8217;s payroll, and 15.5% is assumed directly by the company. They must contribute in accordance with the contribution bases provided for by Law 11/2023 on Social Security, of 25%, 50%, 62.5%, 75%, 100%, 125% and 137.5% of the average monthly global salary of the previous year. This contribution will depend on the net income and turnover of the entrepreneur. As an example, if it is 100%, the taxation would be 22% of the overall salary (in 2024 it was 2,426.70 euros), so the contribution would be 533.87 euros.</li>
</ul>
</li>
<li>Notarize certain operations and transactions (incorporation, corporate modifications, change of bylaws, purchase/sale of shares, etc.)</li>
<li>Have an Equality Plan</li>
<li>Obligations for the Prevention and Laundering of Money and Terrorist Financing</li>
<li>Audit of annual accounts: Public limited companies or limited liability companies must submit their annual accounts to the audit of a person who has the legal status of auditor, if for two consecutive years at least two of the following circumstances occur:
<ul>
<li>a) That the total of the assets exceeds three million six hundred thousand euros.</li>
<li>b) That the amount of the annual turnover exceeds six million euros.</li>
<li>c) That the number of workers during the year is greater than fifty.</li>
</ul>
</li>
</ul>
In addition, if for two consecutive years the annual turnover of public limited companies or limited liability companies exceeds ten million euros, they must submit the annual accounts to the audit of a person who has the legal status of auditor of accounts.

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