Andorra

Andorra is a dwarf state located in the eastern Pyrenees mountains covering an area of 468 km² only, which makes it the 6th smallest nation in Europe. The country is bordered by France in the north and Spain in the south, which can be toured by a three-hour drive from Toulouse to Barcelona (so to speak). Not only is Andorra reputable for being an isolated tax haven, the new tax measures recently introduced make the dwarf state one of the ideal destinations for immigration.

1. Residence
Andorra is not a member state of the European Union. Consequently, every Belgian national who wishes to move to Andorra for a longer term must apply for a residence permit and fulfil certain eligibility criteria.

The first option is residence by investment, which requires a foreign investor to invest a minimum of EUR 400,000 in Andorran assets such as real estate, bank warranties, investment funds, etc.

The second option is available to foreign entrepreneurs who wish to establish a company in Andorra whereby 85% of the activities are destined for end-consumers located outside of Andorra. A similar option applies to those who engage in cultural, scientific or athletic activities of which 85% is performed outside Andorra.

In addition, the following criteria must be fulfilled:

• Proof that the applicant possesses sufficient means to support his/her living in Andorra;
• A minimum stay of 90 days per year in Andorra; and
• Donation of EUR 50,000 (and EUR 10,000 per each accompanying family member) to the Institut Andorra Finances. Nevertheless, these funds will be reimbursed when the investor decides to leave Andorra.

The residence schemes are available to both EU and non-EU nationals.

2. Taxation
On 1 January 2016, Andorra introduced a generous tax regime which entails an income tax rate as low as 10%, as well as exemption to most capital gains. Moreover, foreign withholding taxes can be deducted from the Andorran tax, often reducing the effective taxation to zero.

Andorra has concluded double tax treaties with Spain, France, Luxembourg, Germany, Liechtenstein, Malta, Portugal and the United Arab Emirates. Negotiation with Belgium are under way.

3. Inheritance
Andorra does not impose any tax on wealth, donation and inheritance.

Andorra also does not follow any succession rule in an international situation. In practice, the Court usually applies the inheritance law of the deceased’s state of nationality.