Living in Andorra and Becoming a Tax Resident

Living in Andorra and being recognised as a tax resident are two related but legally distinct realities.

An immigration permit allows you to live in the Principality under a given status. Tax residency determines which country, in principle, taxes the whole of a person’s income.

The residence card, a lease, and a tax certificate are all useful. They don’t replace the facts: days of presence, accommodation, family, activity, and economic interests.

Andorra’s main criteria

Someone is generally considered an Andorran tax resident where they:

• spend more than 183 days in Andorra during the calendar year;
• or hold, directly or indirectly, the main centre or base of their activities or economic interests in the Principality.

Occasional absences can be included in the count, unless tax residency in another state is proven.

The residency of a non-separated spouse and minor children can also be a factor.

Counting 183 days: how does it work?

The count needs to be carefully documented.

Evidence can include:

• travel records;
• tickets and toll receipts;
• phone data;
• invoices and payments;
• a work calendar;
• accommodation;
• local registrations;
• medical appointments;
• schooling;
• everyday activities.

An annual log is preferable to an approximate reconstruction several years later.

The number of nights isn’t always the only relevant piece of information. Each country’s rules and the treaty need to be examined.

The centre of economic interests

Someone can be an Andorran resident even with presence under 183 days, where the main centre of their economic activities or interests is located there.

Conversely, they can face a challenge despite 183 days if another country demonstrates that their household and vital centre remain there.

Economic factors include, in particular:

• where the activity is carried out;
• management of companies;
• the main source of income;
• investments;
• professional wealth;
• accounts and decisions;
• contracts;
• employees and resources.

The move needs to be genuine and consistent.

The treaty in cases of dual residency

Where someone is considered a resident by both Andorra and another treaty state, a series of tie-breaker criteria resolves the situation.

These generally cover:

1. permanent accommodation;

2. the centre of vital interests;

3. habitual residence;

4. nationality;

5. an agreement between authorities. Meeting the domestic 183-day criterion therefore doesn’t remove the need to examine the country of departure.

Permanent accommodation

Andorran accommodation needs to be genuinely available and actually used.

Keeping a house or flat in your country of origin isn’t prohibited. It can, however, create a permanent home in both states.

The analysis focuses on:

• whether the property is available;
• how it’s used;
• occupation by the family;
• letting to a third party;
• energy consumption;
• furniture and personal belongings;
• proximity to work and schools.

A holiday home kept for vacations doesn’t carry the same weight as a family home used every week.

Family and vital interests

Where the spouse and children live is a major factor.

Someone who officially lives in Andorra, but whose spouse, children, school, and main home remain in France or Spain, needs to be able to explain the arrangement.

Vital interests aren’t limited to family. They also include social, professional, economic, and wealth-related ties.

Activity and companies

A director needs to distinguish their personal residency from that of their companies.

An Andorran company needs its own effective management. A French or Spanish company that’s kept needs to continue meeting its local obligations.

Points to watch include:

• where contracts are signed;
• management;
• meetings;
• the bank account;
• employees;
• clients;
• management fees;
• permanent establishment;
• remuneration and dividends.

Setting up an Andorran company doesn’t automatically relocate the activity or the director’s residency.

The first year of residency

The first year can be split between two countries. It’s necessary to identify a realistic switch date and the income received before and after.

Prepare:

• a departure declaration;
• an Andorran residency certificate;
• day-count records;
• contracts;
• registration with the Comú;
• CASS or insurance;
• change of address;
• the status of accounts;
• rental income;
• companies;
• pensions;
• capital gains.

Filings may still be required in the country of departure as a non-resident.

Which income needs declaring in Andorra?

An Andorran tax resident is, in principle, subject to personal income tax on their worldwide income, subject to exemptions and treaties.

Those affected include, in particular:

• salaries;
• director’s remuneration;
• professional profits;
• rent;
• interest;
• foreign dividends;
• capital gains;
• pensions, depending on their treatment.

Income already taxed abroad can benefit from a credit or a treaty mechanism, within certain limits.

Dividends from an Andorran company subject to corporate tax can be exempt from personal income tax for a resident individual. This rule shouldn’t automatically be extended to foreign dividends.

Tax residency certificate

The certificate can be requested to apply a treaty or reduce a withholding tax.

It shouldn’t be seen as an absolute guarantee against any foreign challenge. The other country’s authorities can examine the facts and apply their own legislation or the treaty.

Before requesting a reduced withholding rate, it’s necessary to check:

• the category of income;
• the form required;
• the beneficial owner;
• the period;
• holding conditions;
• actual residency.

Recommended evidence file

Build an annual file containing:

• a calendar of days spent;
• the lease or deed;
• accommodation invoices;
• the Comú certificate;
• the immigration card;
• CASS or insurance documents;
• local expenses;
• school records;
• professional contracts;
• minutes;
• bank statements;
• tax returns;
• tax certificates;
• travel evidence.

This discipline makes filings and renewals easier.

Common mistakes

• only counting days without analysing the household;
• keeping the whole activity in the country of departure;
• using an Andorran company with no substance;
• forgetting worldwide income;
• not declaring foreign property;
• requesting a certificate without preparing the evidence;
• treating 90 days as a universal tax threshold;
• artificially splitting stays;
• ignoring the treaty;
• changing the structure after a sale has already been signed.

Frequently asked questions

Does the residence card prove tax residency? It’s one factor, but days, household, and interests remain decisive.

Do you need to spend 183 days there? It’s a major criterion. The centre of economic interests can also establish residency, but the treaty and the country of departure need to be examined.

Can you keep accommodation in France or Spain? Yes. How it’s used and where the family lives still influence the analysis.

Does an Andorran resident declare foreign income? Yes, in principle, under personal income tax on worldwide income, subject to exemptions and treaties.

To go further: Taxation in Andorra, Residency options, Relocating to Andorra, Andorra vs France, Andorra vs Spain.