Andorra tax and the personal tax IRPF
- Many people have asked about fiscal residency certificates, so if you need to request one, please print from here the application form. They have informed me that this does NOT oblige the applicant to submit a tax return pursuant to requesting this fiscal residency certificate. All you need with the application form is a copy of your residency card or passport ( I would take both!). Please click here for a sample fiscal residency certificate.
- You are exempt from IRPF and are not required to make any declaration whatsoever if you are not in Andorra for more than 183 days per year and there are no plans as yet to ask you to sign a declaration on your movements. In effect the period between being here 90 days as required for passive residency and 183 days for fiscal residency is a grey area. If you do not have or cannot show fiscal residency in a 3rd country it may be in your interest now regardless of y9our actual movements to apply for the fiscasl residency certificate. In summary You can be a fiscal resident and be here for less than 183 days per year AND not pay any tax. I can arrange for you professional advice on this, more and more residents and potential residents are asking just where they stand on tax
- You do NOT have to be here 183 days per year if you wish to be a fiscal resident, on the tax return they do not ask how long you are or are not here.
- In effect the tax office have agreed that the declaration is voluntary in the absence of any monitoring of presence here or not here and in the absence of border controls.
I am pleased to say that I have teamed up with a UK based but International team of experts who are in a position to advise you on matters that may concern you in your country of tax domicile, wherever that may be, when considering a relocation to Andorra. This will be done on a free and without obligation introductory chat with an advisor to find the best way for you to take advantage of potentially minimal income tax regime of passive residency in Andorra. Whether you are concerned about or wish to legally avoid paying company taxes, income taxes, VAT or the setting up offshore companies, trusts etc, this website is a one stop service to advising you and putting theory into practice, and without obligation.
- Not all passive residents automatically have or will become fiscal residents. The law states that anybody remaining over 183 days in Andorra becomes a fiscal resident; however the minimum requirement for passive residency is 90 days. Each resident needs to consider the question of fiscal residency and their own personal circumstances. The times when you could avoid paying any tax anywhere are over.
- The most important factor notwithstanding that a double taxation treaty may or may not exist with a third country is that any tax paid already to that third country is 100% allowable against any tax obligation in Andorra, and as Andorra invariably has the lowest rate of 10%, no tax may ever be legally payable in Andorra. Furthermore as and when Andorra signs the double taxation treaties as a resident here the 10% rate is going to be a lot less than most if not all third countries, so the benefits of an Andorran resident look set to continue.
- The Capital Gains ( as opposed to income gains as explained below) will not be payable for those for example who trade financial instruments such as shares unless you own more than 25% of that entity ( or if you own more than 25% you will not pay Capital Gains Tax if you have held the shares for more than 10 years). In other words for those passive residents who self-trade, there should be no income tax payable since the shares traded would amount to a micro fraction of the company and therefore be exempt from Capital Gains and also do not fall under the earned income bracket.Self trading thouh now is a red line for local banks and in theory you need a trading license which you will not get.
- For those fiscal residents the personal allowances are also very generous. Although the headline tax rate is 10% with the personal allowances the maximum rate will not reach that maximum limit.
- Income of up to €24,000 per annum is exempt.
- Income between €24,000 and 40,000€ at 5%.
- Income above €40,000 at 10%.
- Income of up to €40,000 per annum is exempt.
- Income above €40,000 per annum at 10%.