Many times we hear here about the 90 days needed to reside in Andorra. If you follow the blog you will know that those 90 days are those that are required for passive residence in the country. Many people understand then that living 90 days in the country having passive residence means they have everything ready and nothing is further from reality.
If you do not live more than 183 days in the principality, you are not resident for tax purposes and no document of the Andorran government will convince anyone to the contrary, not even the government that gives it. Being a passive resident is ideal for certain matters with bank accounts, saving of paperwork and possession of housing, but it is not anything for tax purposes. Therefore, if we wish to reside effectively in the principality, it is much more profitable to set up a partnership, to apply for active residence and to make that residence effective without intermediaries. It is cheaper and less complex than the other option.
Passive residence is therefore useful in the case of a retired person, in the case of a person having interests in the principality, but residing effectively in another place and ... not many more. Of course there are specific cases where a passive residence helps a lot to carry out certain activities in the country, but it is certainly not a good way to save tax in Andorra. This has to be kept in mind at all times. The passive residence is very restricted and is valid for a small range of things.
There are also cases of insurance that are begining to require more than 6 months of residence to have coverage, which greatly complicates the situation of passive residents in terms of their health in the country. In itself it is but a small discomfort, but it does not stop being a sample of how they are certain matters in the country.
In short, passive residences are for what they are, often they are given additional properties that they do not possess. Be careful with this type of mistakes, which more than one have ended up being very expensive.