For many in Britain, the tiny Principality of Andorra is a relatively unknown location. The few that may be familiar with it associate Andorra with it being located in the Pyrenees between France and Spain offering winter sports and skiing vacations.
However, Andorra is a perfect destination with numerous advantages to consider relocation and establishing a tax residency. It offers unique high quality of living and taxation advantages for individuals and companies.
For business owners the principality’s corporate and personal income tax rates are at the lower end as compared to other European destinations. Personal income tax is by far one of the lowest in Europe.
Establishing a tax residency in the principality allows businesses and individuals to enjoy one of the safest countries in the world, excellent health coverage, low living costs, attractive natural surroundings and quick access to the Mediterranean. Spain’s best beaches and some of the world’s best restaurants are just two hours away. The proximity to Spain and France offers potential for acquiring a second home while establishing a residency in Andorra respecting its tax residency laws.
Let us turn to the tax advantages the principality has to offer as compared to Great Britain. The United Kingdom does not typically apply withholding tax on dividends paid out by UK companies even in the absence of a double tax treaty (DTA). Income from dividends may be of particular interest for UK citizens. In Andorra, tax residents have a maximum of 5 – 10% income tax on salaries as well as passive income. This may make Andorra very attractive for individuals that still hold economic interests in the UK through company participations. If they are structured via Andorran holding dividend participation they may be potentially tax exempted in Andorra for maximum optimization.
Inheritance and wealth tax do not exist on assets based in Andorra. International tax implications for asset inheritance located outside of Andorra will be subject to the tax and inheritance laws of the other jurisdiction.
Exempted qualified investment income under certain conditions is applicable to most capital gains for private investors. This covers stock trading and more.
Finally there are interesting allowances on investment and savings applicable to Andorran residents.
Property capital gains tax on property is quite progressive. It ranges from 15% to 0%. It is proportional to the years of holding a property.
Tax optimization by relocating your residency to Andorra offers significant tax and lifestyle advantages. Passive residents and international entrepreneurs that are solvent and willing to contribute to make Andorra prosperous and keep the country safe are exceedingly welcome. Tax residency criteria fit the residency type. Some residency programs are available by spending 90 days in Andorra for an entire year.
Andorra has a small and active British community of expats and retirees residing in and around the parishes of La Massana and Ordino. There are frequent British networking and social international club and group get-togethers.
We offer extensive bespoke income type cost/benefit analysis for optimizing your personal and corporate tax via Andorra residency. Our preliminary viability check offers a clear indication of the possibilities before you.