Category D (known locally as "Compte Propi") comes with a stern warning from the Police in Andorra that they are checking ( and I can very much confirm this) that you are living and working in Andorra as your principal base and that the business is being developed inside Andorra, so only if you are intending to live and work in Andorra as your main base and intend to form your own Andorran company will this category may be appropriate for you. This category is a work permit category and you are subject to all the rules and regulations as a full working member of the society. Implied in this is that you must then be a fiscal resident and that brings into play the IRPF liabilities on world wide income if applicable. Please refer to the IRPF page if you have not yet been made aware of tax implications.
Also to be aware of in this Category is that a spouse cannot apply until after 12 months has passed from the approval of the head of household, however if the spouse is made an 11% or more shareholder then they can apply together. The spouse though will be deemed to be working as a director of the company and also be required to contribute to CASS ( The social security system) and as a shareholder/director you will be required to pay CASS as an "autonom" and at autonom fixed rates ( see below).
Under recent changes to the law foreigners can now form and own 100% of an Andorran Company. There are stages of approval but the process can be completed in a matter of weeks. Once that company has been approved and formed, the applicants (those who own 10% or more in a company and who exercise an Administrative post within the company) can apply for residency for themselves and their dependents under Category D. The process can be more involved than the procedures for passive residency, but the advantages are that no bond or investment is required here other than the company and commitment.
I cannot emphasise enough that as this category D does require you to live and work here with a degree of permanence ( and the police are checking this particular category), in which case you may well be deemed to be a tax / fiscal resident unlike category B which is a passive resident category and which does not necessarily mean fiscal residency. In this category ignore any and all references on other websites that 183 days or more are suffcient, they are not, and neither possible 275 days per year, it needs to be a business operating in Andorra and you need to be seen to be running it from here and developing here.
There are several stages involved in category D and they are:
Forming the company: My associate lawyer and accountants will advise you through the process and also you may refer to my sister website at www.andorrancompanies.com. Within this process there is the company foreign investment approval stage and the Notary stage where the company is then approved and this may take 4 - 6 weeks. You will need to supply Apostillised/Legalised police certificates and an Apostillised copy of your passport, I will advise you on this. You will also be required to open a bank account and appear in person before the Notary. The Notary after the application for company formation is approved will take 5-7 days then to produce the registration documents.
Obtaining the local trading license (Obertura de Comerç): Once the company is formed the Parish in which the company has its registered address will need to approve a trading name and make an inspection of the premises ( and this can be a residential apartment subject to a few conditions such as the permission of the landlord and a designated area within the apartment of 20 square meters, inter alia) ( This may take up to 2 weeks). We can apply for residency while this step is under way by signing an undertaking to produce the required company license, you have 3 months to do so.
Applying to Immigration for a work permit for the shareholder(s): If all the documentation is correct ( see below) then a work permit can be issued in a matter of days. Note however that in many cases you may well need new police reports since Immigration requires an original and it must be in date, with a 3 month expiry this often means a fresh application.
Applying to CASS: This is the local social security system which applicants are obliged to join. As a company Shareholder/Director you will be required to contribute to CASS as an Autonom. This means that your contribution is not linked to salary but is fixed monthly and from April 2016 the CASS contributions increased from 20% to 22% in respect of salaried employees and also for the cost of an Autonom which is now (2017) €449.10 monthly for each Shareholder/Director. There is generous relief that can be applied for, for example there is a 50% discount automatically for the first 12 months of a new business, as well as levels of turnover and other factors after the initial period. Please note that now they count the date of approval of residency for the CASS to begin automatically so a delay in application to CASS will result in back dated contributions.
Once the company has been formed and registered by the Notary we can then apply to Immigration for residency ( this can be done after the Notaryl stage, we can provide Immigration with the local trading license and CASS later).
For applications to Immigration under Category D the applicants must:
If you intend relocating with children, please see my section for relocating to Andorra with a family where extra documents are required in support of children'a application.
The residency in Category D is granted initially for a period of 1 year, then for 2, 2, 2 and then every 10 years. At renewal you do not have to be present, although under this category I advise that you are here due to checks made. The documents required are obtained locally and the process is quite straightforward.
Changes to Category D have been proposed that will include a bond of 30,000 euros rather than the present system where there is no bond payable. Police patience has been tested in that a considerable number of residents on this category are using it simply to avoid paying the bond as under Category B which allows the flexibility of not only developing the business outside Andorra but also the flexibility of living and working in Andorra with a degree of permanence.
If for example a husband and wife have 50% each of a company then they both can apply for active residency (work permits). If the husband has 100% then the wife can apply for residency as a family grouping and as a dependent but will not be entitled to work, only reside in Andorra. Please note that with effect from March 2014 Immigration requires that all family dependents regardless of nationality will have to wait 12 months before they can apply to become dependents under the family grouping scheme. This 12 months does NOT apply if the spouse is either a Director of the company or is a minmum of 11% shareholder. Structure therefore is importnat when considering a company with which to apply for residency. Myself and the lawyer will guide you through this area.
I have also been warned that for company formation and active residency the 90 day rule will not apply and that they expect you to reside and work in Andorra for the whole year and I am told police checks will be more strict as opposed to passive residency where you can come and go as you please. This has since been confirmed with the police visiting apartments and leaving a notice to call them within a time period.
Passive residents are also allowed to form an Andorran company providing it is not actively trading in Andorra. For example a passive resident that sets up a company to buy property in Spain or Italy, or who imports and exports to and from third countries are allowed. Passive residents can own a company here but will not receive a trading license for active trading inside Andorra: For that you do need active residency.
Please click here for my sister website, this is for applications to form a company in Andorra, obtain a trading license and apply for active residency. My Associate lawyer will advise you on all legal matters.
Please read about Andorra first on this website and decide what is best for you.
www.andorrancompanies.com and www.livinginandorra.com are my two websites designed and maintained personally to offer you advice and assistance on all legal matters and a full package of relocation and company formation in Andorra. Please feel free to contact me for any questions you may have.