Active and Passive Categories summarised - Andorra | Simple Residency Guide | what do I do?

El Tarter - Soldeu 2019
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Active and Passive Categories summarised

Residency

Common to all categories of residency are:-


You must be here in person with any dependent over 18 years old at the time of application. For children we can get around that requirement.

Time spent here or not spent here is not monitored ( except with the possibility of category D). This means in reality you can spend as much or as little time here as you wish.

Categories can be inter-changeable once approved, but strictly in compliance with the bureaucracy of Immigration.

Let me summarise the different categories available. Once you have decided which category may be appropriate for you, then please click on the appropriate category link to read in detail the requirements and how to go about starting the procedure.

living in andorra cartoon

No work allowed inside Andorra, but you may continue to have an existing company or employment outside Andorra and may live most of the time away from Andorra.


The fully refundable but non-interest bearing deposit payable to the government is €50,000 for the head of household and €10,000 for each dependent. Within six months of approval the applicant must then show that he has invested a total amount of €400,000 in Andorra, please note that the government deposit does form part of this investment (Explanation: the €50,000 deposit is paid at the time of application as is an additional €10,000 for each dependent. Therefore, a husband and wife and one child will pay €70,000 as a deposit. The extra investment requirement will then be €330,000). This investment may be in property or financial investments in Andorra or a combination, and these are outlined in detail on the page specific to Category A.
 
On paper the minimum required stay is 90 days per year. The minimum required stay to become a fiscal resident is 183 days per year. So, a passive resident who stays in Andorra for less than 183 days per year can maintain his residency and not necessarily become a fiscal resident. For those passive residents who need to become a fiscal resident but who cannot in practise stay for 183 days per year can simply opt to declare tax by stating that Andorra is their principal base of economic activity regardless of the number of days spent here. For details of tax implications please refer to the Andorra Tax page.
 
Residents under category A are also allowed to form an Andorran holding or management company.
 
Category A is a paper exercise and remains the most straightforward category of residency to apply for. It takes 3-8 weeks for the card to be issued. If the investment requirement is not a concern for you then this category is by far the most straightforward and quickest route.


Residency where forming a company is required for the application and is intended for those who wish to run a business in Andorra, who want flexibility of living here and where the focus of business is international. This category requires a minimum of 85% of the business must be outside Andorra.


The fully refundable but non-interest-bearing deposit payable to the government is €50,000 for the head of household and €10,000 for each dependent. In this category you are not required to prove any extra investment as in Category A. However, you must within seven months of approval have formed an Andorran company. This category is subjective, and approval is granted on the basis of a viable business plan at the residency application stage. I have guides on this to assist you.
 
As with Category A, the minimum required stay is 90 days per year.  Of course, the company itself will be liable to Company tax in Andorra at 10% on profits but for the individual shareholders unless they stay here for more than 183 days will not necessarily become a fiscal resident. In effect category B allows residency, an Andorran company, and flexibility of living and working in Andorra as a principal base. One point of the tax law is that dividend distribution from an Andorran company is exempt from personal income tax in Andorra (once the company tax is declared). Salaries under this category are also treated as dividend distribution.
 
Category B provides that a minimum of 85% of business activity must be conducted outside of Andorra, and there is a provision for the company to be able to employ a maximum of one employee in Andorra.
 
Category B can take longer to approve, maybe 1 to 3 months, as the business plan has to be studied by various government departments. Once approval is granted the residency card is issued within 3 to 6 weeks and the formation of the Andorran company can commence. Family dependents can be included in the application at the same time as the main applicant (but NOT always in Category D, please see below) or can be added at any time after approval of the head of household.
 
Category B does NOT allow you to contribute to the local social security system (CASS) and you will require private medical insurance.


This passive residence category is designed to attract the professional sportsmen, writers, entertainers, and famous people to Andorra.


In essence this is exactly the same as category A but the applicant is required to show that he is a professional and famous sportsman, scientist, sculptor, author, or famous person in his own right. If this can be proven by means of a professional contract, CV and proof of achievements then the applicant will be required to pay €50,000 deposit to the government plus €10,000 for each family dependent but will be exempt from having to invest a further amount up to €400,000 as in category A.
 
Again, the minimum required stay is 90 days per year and therefore the resident is not necessarily a fiscal resident as in Categories A and B above.
 
As in category B there is a subjective element In determining whether the applicant is of sufficient fame or standing to be approved under this category but approval does come through a lot quicker than Category B and generally the paperwork is not too complicated to put together in most circumstances.


An active work permit in Andorra but only allows you to work for the company that you form. If you wish to trade in Andorra for example import goods, employ local people, have a shop or restaurant, manufacture here etc. Category B above  allows flexibility, this category intention is for you to develop the business within Andorra.



Category D (known locally as "Compte Propi"). As from 2018 there is a bond of €15,000 per shareholder/Director who must also hold a minimum of 20% of the share capital in order to apply for residency.
   
Category D does not require a business plan but does require the foreign investment approval for the formation of an Andorran company first and before applying to immigration. It should be noted that once the Andorran company is formed the procedure at immigration is a paper exercise only. This category is not applicable to those seeking employment from an existing company, there must be a formation of a new Andorran Company. The only provision for self-employment is in certain professions such as architects, doctors and so on, but the rules are complicated and procedure difficult for approval (Known locally as "Professionel Liberal")
 
The minimum time required to be spent here is 183 days per year rather than the 90 days for passive residents. For this reason in Category D you will become a full fiscal resident but note that the personal income tax law means that dividend distributions from an Andorran company are exempt from personal taxation (once the corporation tax is declared).
 
In this process the Andorran company can take up to 4- 7 weeks to complete. Once the company documents are available an application can be then made to immigration for active residency. The processing time for active residency is a matter of days but does include an undertaking to prove to immigration that all of the company formation and local licensing procedure will be completed within 3 months of residency approval.
 
For a spouse to become a non-working dependent, Immigration require a 12 month wait between the main application and the family grouping (unlike Category B). However, if the spouse can be included as a minimum 20% shareholder then applications can then be at the same time. This will incur extra contributions though to CASS (Social security) as the spouse will be deemed to be working. Category D is the only category where you are obliged to contribute to CASS, the other categories require private health insurance.

Once you have an idea of what category you may be interested in please go back and click now on the appropriate Category heading and discover in more detail what is involved. I fully understand that each individual case is different and that very relevant questions arise. Please do email me if you have specific questions.

residency@livinginandorra.com
+376 836255
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