The banking secrecy attracted great fortunes, and there were those who took advantage of it. The prohibition of disclosing information about customer accounts kept Andorra as a tax heaven. However, as of January 1, 2017, with the entry into force of the automatic exchange of information agreement with the European Union (EU) and the Organization for Economic Cooperation and Development (OECD), the Principality of Andorra ceased the status of Tax Heaven, managing to exit the EU’s blacklist of tax heavens on December 5, 2017. This move contributed to shaping a new image of economic multilateralism for the country.
On the other hand, Spain stopped considering Andorra as a tax heaven in 2010 through a tax information exchange agreement that came into force in 2011. This agreement established the commitment to adapt the laws to the requirements of the OECD in order to comply with transparency and good tax governance requirements. Furthermore, on February 26, 2016, the Convention between the Kingdom of Spain and the Principality of Andorra for the avoidance of double taxation in relation to income taxes and prevention of tax evasion entered into force (the double taxation convention with France had entered into force on July 1, 2015, and to date, 10 agreements have been signed and incorporated into the legal system of the Principality of Andorra).
In recent years, the Principality of Andorra has made significant efforts to combat tax evasion and money laundering. This has helped create an image of legality and transparency, aligning with international standards set by neighboring countries.
International Monetary Fund (IMF) Building
Furthermore, since 2020, Andorra has been a member of the International Monetary Fund (IMF), providing access to financing programs and technical assistance from this organization. In terms of reputation, joining the IMF has helped improve the country’s image for its past status as a tax heaven, and contributes to greater stability and credibility in the Andorran financial system.
Due to its location between France and Spain, many companies have relocated to Andorra, and thanks to them, many skilled workers and service providers have also chosen to reside in these valleys. This is not surprising given the quality of life, healthcare, and safety that we enjoy in this country. Today, we can say that the Principality of Andorra is an international financial center with significant tax advantages for businesses, self-employed and even employees. The country has a tax rate of 25%, compared to the EU average of 40%, according to the World Bank.
However, the Principality of Andorra not only offers tax and fiscal advantages. Andorra is peaceful and has many interesting and diverse places, ranging from shopping centers to natural parks. It is precisely thanks to its natural and geographical location that many outdoor activities have been promoted in Andorra, some of which have brought international sports events to the forefront, such as:
- The Alpine Skiing World Cup, the Freeride World Tour, and the Tour of France
- UTMB Trail 100 Ironman 70.3
- Many family-friendly activities like searching for “Tamarros” and other classic easily accessible routes.
It’s also worth mentioning that the government has sought to showcase the essence and authenticity of the natural landscapes and wildlife found in the Andorran valleys through a documentary video produced by NATIONAL GEOGRAPHIC: “ANDORRA AL NATURAL.”
Considering all of the above, in recent years, many have decided to relocate to the Principality, enticed not only by its low taxation but also by its location, multiculturalism, quality of life, safety, high-quality healthcare system, long life expectancy, and the abundance of sunny days and hours, a characteristic of Southern European countries. However, not everyone has the opportunity to come and live in Andorra, so it is essential to gather information and carefully review the requirements needed. In summary, in recent years, Andorra has transitioned from being a tax heaven to a natural paradise.
Therefore, those who want to take advantage of its tax and fiscal benefits must also embrace nature, breathtaking views, clean air, tranquility, silence, and its numerous advantages. If you believe you are one of them, we can assist you with:
- Active residency (with economic activity in Andorra) and help with the procedures to create your company or set up your professional office.
- Passive residency (with little or no economic activity in Andorra, or residence for scientific, cultural, or sports interests).