How to obtain an active residence permit in Andorra?

Written by Marc Cantavella, AndorraInc Co-Founder & Andorran Tax Expert

Andorra is one of the most fashionable destinations thanks to its low taxation, its security and its privileged geographical location. It is not surprising that more and more citizens are moving their residence to the small country of the Pyrenees.

In this guide we will explain the Andorran active residence, the residence permit designed for those who want to come to the country to work.

New report

The report “The definitive guide to living in Andorra” is now available, with detailed information on Andorra’s tax framework, residence and society.

Click here to download it for free.

How to obtain a residence permit in Andorra?

Residency in Andorra can be obtained in the following ways:

Active residence:
- Employee: the residence of those who get a work contract in an Andorran company
- Self-employed: the residence for all those who want to start their own business in Andorra
Passive residency: the equivalent of the “golden visa” of other countries, intended mainly for annuitants and retirees
Digital nomad visa: a new permit for those who provide online services to entities outside the country
Reunification by a family member who is already in the country
Residence for health reasons: for example, for admission to a geriatric center

We already talked about the Andorra passive residence on another occasion, so today we will analyze the active residence.

Who is this residence designed for?

Active residence is the most common type of residence, as it is the only way to enter the country that allows you to work in Andorra:

Passive residents can only obtain income from work if it comes from abroad (although it is mainly an annuitant profile that lives off passive income)
Digital nomad visa holders cannot provide services to Andorran companies (and it is an extremely difficult visa to obtain)
Reunifieds do not have a work permit
Residents for health reasons do not have a work permit

Content creators, digital marketers, engineers, consultants… In virtually all cases where a qualified worker chooses to carry out his activity from Andorra to enjoy its taxation, he does so through active residence as a self-employed person.

In addition to the self-employed active resident, there is also the figure of the active resident employed by others: this is the case of someone who obtains residency in Andorra through a job offer from a local company.

At AndorraInc we do not offer the service of assisting Andorran companies in the hiring of foreigners nor can we help you find an employer in Andorra.

For that reason, in this guide we will focus on the other type of active residency, the self-employed active residency (“residència i treball per compte propi”), which is the most relevant for our clients.

What are the requirements?

The requirements to be met for obtaining active self-employed residence are as follows:

Have a place to live in Andorra, either purchased or rented.
To be the administrator of an Andorran company.
To own at least 20% of the company created.
Deposit €50,000 with the Andorran Financial Authority as a non-interest-bearing deposit with the application for self-employed residence.
Effectively reside in Andorra for at least 183 days per year.
Exercise a real activity in the country with a minimum income.

The part about permanence is especially important: at any time but specially during the renewal process the police may check that you have actually lived in Andorra, even by asking neighbors.

Also, you should keep in mind that if your residence is active, it is assumed that you have some economic activity: if your company generates a very low amount annually, the authorities may interpret that you are not really carrying out such activity.

Lack of business activity or a negative report by the police may cause the immigration department to withdraw or not renew your residence permit, which would automatically mean losing your tax residency as well.

How long does the residency last?

The active residence permit is temporary and if the conditions mentioned above are maintained, it is renewed as follows:

1 year after obtaining residency
2 years later (after 3 years of residency)
2 years later (after 5 years of residency)
10 years later (after 15 years of residency)
Every 10 years

The immigration department tends to be more demanding in the first years of residency, it is more difficult (but not impossible) for residency to be withdrawn when you already have a ten-year renewal, that is, after five years in the country.

Furthermore, after 20 years you could even apply for Andorran citizenship.

How to obtain an active self-employed residence permit?

Before submitting the dossier to immigration to obtain the active self-employed residence permit, it is necessary to incorporate a company in Andorra.

The most common legal structure is the Societat Limitada (SL), a limited liability company. It can be managed by several partners, but it is also possible for a single partner to manage it, in which case we are talking about a Societat Limitada Unipersonal (SLU).

Your advisor in the country will take care of these procedures, but broadly speaking the steps to incorporate the company are:

Propose names for your company
Apply for a foreign investment authorization
Obtaining a tax registry number

Following steps

Once the company is constituted, the following documentation must be submitted to the immigration department of Andorra:

Application for authorization of active self-employed residence duly signed by the client together with the passport duly apostilled (together with the deposit of €50,000 in the AFA).
Affidavit of criminal record of the place of origin and birth.
Documentation to prove marital status.
Documentation to prove accommodation in Andorra (rented or owned).
Curriculum vitae of the applicant.
Consent for medical tests.

After providing all these documents, the Andorran immigration department will decide on the application for an active self-employed residence permit.

The application can only be denied in case of presence of serious background or risk of laundering and reputation for the country.

Deposit with the AFA and exemptions

Active residency requires you to deposit €50,000 with the Andorran Financial Authority. This deposit was raised in 2022 (until then it was €15,000) to make the conditions for entering the country more demanding at a time when Andorra was receiving more residents than it could handle.

This deposit will be refunded to you when you terminate your residency for any reason, but as it is not remunerated by then it is likely to have been devalued due to inflation.

However there is a very interesting exemption from the deposit for those known as “professionals liberals” or “professionals titulats”: this is the name given in Andorra to those who practice qualified and regulated professions, such as lawyers, doctors, architects or engineers.

Therefore, if for example you are a registered engineer, you can obtain active residency in Andorra without paying this deposit. And another advantage of this group is that they are not required to form a company, which can make their structure more manageable.

New report

The report “The definitive guide to living in Andorra” is now available, with detailed information on Andorra’s tax framework, residence and society.

Click here to download it for free.

What are the advantages of active self-employed residence?

After years of practice in the country, we believe that the main advantages of active self-employed residence are as follows:

It is ideal for regrouping the family in Andorra.
It is cheaper than the passive residence, since the cost of incorporation of the company and a deposit of €50,000 is much lower than the €600,000 investment of the passive one.
It is ideal for those who provide online services abroad or sell digital products.
It is an easy way for Latin Americans and non-Europeans to reside in Andorra, without any additional requirements with respect to Europeans.

And, of course, active residence normally entails access to the advantageous Andorran tax system:

Low personal income tax: the top bracket for personal income tax is 10%, significantly lower than in many neighboring European countries.
Low or no capital gains tax: foreign non-real-estate capital gains or capital gains from company shares held for at least 10 years do not pay taxes; otherwise, up to 10% is paid.
No wealth or inheritance tax: Andorra does not impose any inheritance tax or wealth tax, making it attractive for long-term estate planning.
0% tax on local dividends: dividends paid by Andorran companies to local tax residents or non-residents come with no additional tax liability in Andorra.
Low VAT (IGI): the general indirect tax (IGI) rate in Andorra is just 4.5%, considerably lower than standard VAT rates in other European countries.

Can I bring my family?

The active self-employed residence in Andorra allows the grouping of descendants, spouse, dependent ascendants of the resident and other persons under the legal guardianship of the resident. The regrouping can be done three months after obtaining the residence.

Until now this “express” reunification was only available to French and Spanish citizens, and citizens of other countries had to wait one year. However, the law has changed this 2021 and now the deadline is always three months, regardless of the country of origin.

Thinking about applying for this residency?

If you are interested in changing your residence to Andorra, we recommend reading the report “The definitive guide to living in Andorra”, with the most complete information on Andorran taxation, residence and society.

At AndorraInc we have helped countless entrepreneurs to settle in the country. If you want to apply for active residence as a self-employed person in Andorra, do not hesitate to contact us.

You can contact us without obligation in the following ways: