Passive Residency in Andorra vs. Active Residency: Which Option Suits You Best?

21 August, 2024

When it comes to living in a country that offers a high quality of life, attractive tax benefits, and a safe and picturesque environment, Andorra stands out as a top destination.

If you are considering moving to Andorra, it is essential that you understand the differences between passive residency and active residency in order to make the best decision according to your needs and circumstances.

Who is Passive Residency in Andorra for?

Passive residency in Andorra is designed for those who wish to live in the country without the need to actively work.

This type of residency is ideal for retirees, investors, or people with sufficient income from outside Andorra who want to enjoy the benefits the country offers without the obligation to participate in the local economy.

Requirements to Obtain Passive Residency

Obtaining passive residency in Andorra is not a complicated process, but it does require meeting certain requirements that demonstrate your ability to sustain yourself financially without needing to work in the country.

Among the most important requirements are:

Economic Capacity: You must demonstrate that you have sufficient income, generally a minimum of 300% of the annual Andorran minimum wage, adding 100% of this indicator for each dependent.
Financial Deposit: A non-refundable deposit of €47,500 must be made with the Andorran Financial Authority (AFA), plus an additional €9,500 for each dependent who acquires resident status.
Investments: Invest permanently and effectively at least €550,000 in assets within the country (real estate, company shares, etc.).
Private Health Insurance: You must take out private health insurance that covers all your healthcare needs in Andorra.
Fixed Residency: You must spend a minimum of 90 days per year in Andorra to maintain passive residency.
Property or Rental of Housing: It is necessary to own a property or have a rental contract in the country.
No Criminal Record.
Sign a residency commitment and maintain the aforementioned insurance policies in force.

Passive residency is renewable every two years during the first six years, and then it is renewed every 10 years.

Who is Active Residency in Andorra for?

Active residency, on the other hand, is intended for those who wish to live and work in Andorra. This type of residency allows holders to work as employees, establish their own business, or even work as freelancers in the country.

It is an ideal option for entrepreneurs, independent professionals, and workers who want to benefit from Andorra's tax advantages while contributing to the local economy.

Requirements to Obtain Active Residency

The requirements for active residency are different from those for passive residency, as they are aimed at people who will integrate into the Andorran labor market. The main requirements include:

Work Permit: Owning more than 34% of the company and acting as its administrator.
Financial Deposit: A deposit of €50,000 with the Financial Regulatory Authority (AFA), which will be returned once residency in the country ends.
Contribution to Social Security: It is mandatory to contribute to Andorra's social security system, which grants you access to healthcare and social benefits.
Fixed Residency: As with passive residency, you must own or rent a property in Andorra. You must reside at least 183 days in the Principality if you wish to live there permanently.
No Criminal Record.

Comparison between Passive Residency and Active Residency

Caption
Characteristic	Passive Residency	Active Residency
Work Authorization	No, working in Andorra is not allowed	Yes, you can work as an employee or be self-employed
Financial Requirements	Demonstrable income from outside Andorra, financial deposit	Employment contract or own business
Taxes	Exempt from labor taxes	Low taxes on labor income
Contribution to Social Security	Not required. Private insurance is mandatory	Mandatory for all workers
Time in Andorra	Minimum 90 days per year	Full residency (minimum 183 days per year)
Benefits	Living in Andorra without working	Integration into the labor market and tax benefits
Profile Type	Retirees, investors, people with passive income	Entrepreneurs, professionals, workers

Which is the Best Option for You?

The decision between passive residency and active residency largely depends on your personal and professional goals. If you enjoy a peaceful life with secured income from abroad and want to take advantage of the benefits of living in a country with a privileged natural environment and an attractive tax system, passive residency is probably the best option for you.

On the other hand, if you are looking to establish or expand a business, or if you prefer to integrate into the economic life of Andorra, active residency will allow you to do so while enjoying one of the most favorable tax regimes in Europe.

In summary, both passive and active residency in Andorra offer unique advantages that can suit different lifestyles.

It is important to assess your personal and professional needs before making a decision. Whichever option you choose, Andorra offers a safe environment, a high-quality educational system, and a highly competitive tax system that can significantly improve your quality of life.