Passive, or non-profit, residence in Andorra is aimed at those people who live in the Principality but are not employed by any of the companies established there. This is the best way for us to obtain a legal residence permit without having a work contract in the country.
The non-profit residence is especially aimed at those who can prove sufficient income to survive without a job and who obtain financing legally, whether through pensions, property funds, bank interest, or any other demonstrable means.
The non-profit (passive) residence is especially interesting for those people who are not going to stay in the country for a long time, as they only require you to stay there for 90 days, instead of the 183 that are requested for other types of residence permits. This way, we have availability to be traveling for most of the year.
More specifically, passive residence is aimed at:
- Investors in Andorra.
- Those people susceptible to scientific, cultural or sporting interest.
- Those professionals and entrepreneurs with projects, of any kind, at an international level.
As we will see later, to complete the application you must be in the country and be over 18 years old (in the case of minors, you do not need to be physically there). Andorran regulations allow that, once the categories mentioned above have been approved, they can be exchanged in the event that your situation also changes, albeit in compliance with the requirements. This is to maintain the “immigration quotas” that the government issues periodically, thus avoiding uncontrolled immigration.
Requirements for obtaining passive residence
In 2020, the Andorran authorities updated the requirements so that we could opt for passive residence in the Principality. But these requirements differ, depending on the categories. If your category is investor, you should meet the following points:
- Have a property in Andorra or a rental contract.
- Invest in a property worth at least 350,000 euros or pay this amount in a bank fund in Andorra.
- Be in the country for a minimum residence time of 90 days.
- Certificate of good conduct.
- Private medical insurance.
- Medical certificate issued in Andorra.
- Present that you have an income of more than 300% of the Andorran minimum wage.
In addition to all this, you must leave a deposit of more than 50,000 euros, plus 10,000 euros per dependent, at the Andorran National Institute of Finance (INAF) until the passive residence is resolved. That is, we are talking about a refundable deposit, but without interest, as long as you invest a total of 400,000 euros in the country, within six months of the application. These investments are very detailed on the Andorran government website, but they basically refer to real estate or financial investments.
Within this category, the Andorran Administration establishes two models, A and B. Thus, the residents of category A can also form an Andorran management company. In practice, it is the simplest category and its response usually takes only three to eight weeks.
Model B is a bit more complicated, as it requires you to do at least 85% of the commercial activity abroad, although you can employ Andorrans (also with a maximum number). Its management can take between one and three months, as the business plan has to be evaluated by various government departments. When you get your approval, residence cards are issued three to six weeks later. Once you have it, you can start formalizing the company within the Principality.
Requirements for scientific, cultural or sporting reasons
It is well known that many Spanish athletes are registered in Andorra, for example, the tennis player, Arantxa Sánchez Vicario; the tennis player, Carles Moyà; the motorcyclists Álex and Pol Espargaró, Jorge Lorenzo and Dani Pedrosa, among others. The principality also requires them and all those who want passive residence for scientific, cultural, or sporting reasons.
- Certificate of marital status.
- Home rental contract or purchase documentation.
- Proof of scientific, cultural or sporting qualities.
- Conformity of income higher than 300% of the Andorran minimum wage.
- Certificate of good conduct.
- Medical certificate issued in Andorra.
- Retirement pension, disability or pension insurance, depending on the case.
- Deposit of more than 50,000 euros, plus 10,000 euros per dependent, in the INAF (Andorran Financial Authority) until the passive residence, is resolved.
We are talking about a permit that has to be reviewed and renewed for the first year, and after that, to do it every three years.
Requirements for entrepreneurs with international projects and for pensioners
With this type of passive residence, the authority of the Principality grants a special permit for all those who want to open a company in Andorra but the services are designed internationally. These would be the requirements:
- Contract for renting or buying a home in Andorra.
- Justification of sufficient income.
- Minimum residence time of 90 days.
- 85% of income must be generated in countries other than Andorra.
- The main headquarters of the company must be in Andorra.
- Accreditation of the business plan to be developed.
- Justification of retirement pension, disability, or pension insurance, if applicable.
- Make a deposit of more than 50,000 euros, plus 10,000 euros per dependent, at the INAF until the passive residence is resolved.
Finally, to say that this residence permit is valid for two years and can be renewed for two more years and with an extension of three years. After seven years, the next renewal will last 10 consecutive years.
Steps to apply for passive residence
Managing non-profit passive residence in Andorra is not complicated, as long as you meet the above requirements. However, you should keep in mind that the steps to follow will be different, depending on which category you are applying for.
An important advantage is that you can do part of the management from your country of origin and then go to the Principality just to formalize your application and be given a passive residence permit. As you will not yet have this permit for this visit, you will need to travel with a tourist visa, which will allow you to be legally in the country for a total of 90 days.
If during this time you cannot complete the application for any reason, you will have no choice but to return to your country, apply for a new visa and return to the Principality, to try again.
Different types of residence permits in Andorra
There are approximately six residence permits in Andorra, although they can be grouped into two quite different categories: active and passive (which we developed at the beginning of this article). The difference between the two lies, above all, in the professional activity that is carried out. While you are active, you can apply for the first one if you have a work permit and you can carry out work or professional activity there. The second (passive) is, as we said at the beginning, the possibility of living legally in the Principality, without carrying out any work activity.
In addition to these two large groups, there are numerous residency work permits that have been created specifically to meet certain professional needs, which do not meet the above requirements. In this modality, there are also two major types: generals and cross-border workers.
If you are an active resident you can apply for residence for family reunification of:
- Your spouse or stable marriage partner.
- Your minor children and your spouse’s minor children, if you have legal custody.
- Your adult children and the adult children of your dependent spouse who has legal guardianship or a similar institution.
- Your retired or over 65s.
- Any person over whom you have legal or similar guardianship, as long as both parents have lost parental authority.
Advantages of having an Andorran residence
As in any country in the world, legal residence in a country where you were not born will allow you to enjoy all (or almost all) of the benefits enjoyed by its citizens, in addition to having their obligations as well. But the most important is that of free movement. In the case of Andorra, the non-profit residence will be used to do all this:
- You can apply for Andorran citizenship if you have been in residence for more than 20 years.
- You will have the right to free movement, both in Spain and in France, as Andorra has agreements with two countries, although the Principality is not part of the European Union.
- One of the most attractive advantages (and that we have already mentioned before) is to be able to enjoy the tax regime of Andorra, especially as far as consumer goods are concerned. Their taxes are very low (you will not pay more than 10% of what you earn, which is unthinkable in other countries) and there are no tax burdens such as capital gains, corporate dividend taxes, or wealth taxes.
- Make it easy for your family to also get the residency while you make your own application.
- You will enjoy a very quiet life, in a wonderful natural setting and with a very low crime rate.
- Public health and education systems are characterized by being very efficient and of high quality and anyone who has a residence can benefit from both.
Main taxes of the Principality
Although fewer taxes are paid in the Principality of Andorra than other European countries, this does not mean that there are not some to support the country. The most important is the personal income tax, which in Spain we know as personal income tax. Since 2015, personal income tax has become the main country tax, which must be paid by all residents, regardless of nationality.
It is a simplified and very transparent system to which self-employed workers, employees, and employers are obliged. Not everyone is obliged to pay it, as for example, those who earn less than 24,000 euros will be completely exempt, which is unthinkable in other countries and demonstrates the high standard of living in the Principality.
The next tranche of personal income tax, which is between 24,000 and 40,000 euros, would have a tax rate of 5%, while annual income in excess of 40,000 euros will have a 10% tax rate. As is the case everywhere, there are a number of deductions to lower the rate that is related to pension funds, expenses spent on buying a home, or the family or individual situation of people (such as whether or not they have children, etc.). ).
In Andorra, income tax returns are made between 1 April and 30 September.
Other important rates are, for example, the indirect general tax (IGI), a tax figure that we do not find in Spain, but in France, as it resembles the French VAT and taxes consumer goods and services. It is very far from the Spanish VAT and that of other European countries, as the Andorran only reaches 4.5%. This, in practice, means that the country is becoming a very attractive place, fiscally speaking, especially for companies.
In short, non-profit (or passive) residence in Andorra is designed for all those people who want to live in the Principality without having to work there. This is an interesting permit for investors, illustrious people from the scientific and sports sectors, and entrepreneurs with international projects. Andorra is a very interesting country, fiscally speaking, and its residence permits will give you many advantages, including taking advantage of its low consumption taxes, traveling freely in Spain and France, and enjoying education and high-quality healthcare.