A while back, Jess and I took a chance on a 4 week trip to Andorra. It was time to rationalize our whole living/working while travelling situation. We’d planned to get residency in Panama but after a visit there and time to think it over, it didn’t really suit what we were looking for. Andorra had long been on our shortlist as a possibility that we had to check out, so we thought we’d take a trial run to live in Andorra.
During those 4 weeks, we lived an average every day life and fell in love with the country during potentially the quietest time of year. By the end of our visit to Andorra, we had organised a bank account, signed a lease, our residency application was in progress and for the first in a long time, we were ready to put down roots. It was a massive decision, but it felt so right for so many reasons.
Where Is Andorra?
Having spent a lot of time in mountain biking and skiing circles, we’d known about Andorra for a long time – both the UCI MTB World Cup and Freeride World Tour happen here. Some random facts about Andorra:
- It’s a land locked country between Spain and France
- It is not part of the EU, but it does use the Euro
- It is around 2.5-3 hours by bus to Barcelona (€15) and a little longer to Toulouse. They are the closest major airports
- Andorra is the world’s only co-principality, that is, it’s ruled by two princes
- It is claimed that Andorra is the world’s 14th oldest country
- It is the only country in the world where Catalan is the official language
- Andorra’s total land mass is 468km²
Why Would I Want to Live in Andorra?
I always played down the safety risk in Panama and I feel fairly comfortable in most situations, but it really is nice to live in a country where you can leave your cellphone and wallet on a table at a cafe or your car running while you are at the bank.
Previously living in Whistler, Canada, bike theft even while well locked was a huge problem. Here, you can leave your $7500 bike out of sight without a lock and it’s fine.
The locals claim this is the safest country in the world. There are 2 roads out of the country, both with patrolled borders and no airport. Given it’s so hard to warm up your car here, it’s not uncommon for people to leave their car running while they visit the pharmacy/bank/bakery.
Andorra’s Cost of Living Is Pretty Great…
- Modern 2 bed/2 bath apartment with underground car park/storage locker: EUR650mo
- Utilities: €80mo
- 285Mbps internet connection: €39mo
- Standard menu del dia: €8-15
- Coffee – €1-1.25
- Gym membership with classes, pool, sauna, etc included: €40mo
- Year round bike park/ski pass for residents: €168 (this is insanely cheap coming from Whistler)
Taxation in Andorra
A lot of people wrongfully assume there is no tax here. The tax system in Andorra is relatively simple, but fair compared to many larger countries. You’re better off thinking of Andorra as a giant duty free shop in the mountains.
- Company profits tax: 10%
- Personal income tax: 0-10%
- Individuals are able to earn €24,000 at a tax rate of 0%. €24,001-€40,000 is taxed at 5%. Over €40,000 is taxed at 10%.
- Married couples see a combined €40,000 at 0% tax. Over this amount is taxed at 10%.
- VAT (Sales Tax): 4.5%
- No wealth tax
- No gift tax
- No inheritance tax
- Capital gains tax on Andorran real estate: 0-15%
- Sell within 1 year: 15%
- Sell in the 2nd year: 13%
- Sell in the 3rd year: 10%
- Sell in the 4th year: 9%
- From year 4 onwards the rate decreases by 1% annually, meaning the property is capital gains tax-free after 12 years of ownership.
For official/up to date tax information, please contact the Govern.
The Internet Is Fast!
As I understand it, every home and office in the country has fiber that terminates inside it. Not to the building. Not to the street. Not to your suburb. Right next to your modem!
2018 Update: According to Andorra Telecom some 30,000 homes and 5,000 offices across the country now have upgraded modems, bringing the country’s average speed to 285 Mbps.
And a Bunch of Other Reasons, Such As…
- Hiking is everywhere – we regularly go on a “lunch loop” and see some views that some people pay thousands to see once in their life
- There are 3 ski lift companies (maybe more, it still confuses me) and 2 mountain bike parks in Andorra
- If you enjoy road cycling, it’s a perfect place to train. Many pro cyclists live here outside of race season
- Festa Majors bring multi-day parties to every village in the country, even when there are only a handful of houses
- Booze is at duty free prices
- For a small country, there is always some sort of event on
- If you’re into cars or motorbikes, your people are here
- Almost every house or apartment in the country has amazing views
- It’s the top 5 healthiest country in the world according to The Lancet
- It’s one of few places in the world where you can get residency for not a huge financial outlay, pay very reasonable tax and enjoy the safety and comfort of a 1st world country
- If you need to spend some time in a big city Barcelona is only a EUR15 bus ride away
- Andorra has this beautiful mix of old town, technology and country. In a 1km walk I can pass tobacco fields, horses, old town buildings, modern apartments, tractors carrying bales of hay, Fiat Pandas and Porsche 911s. Then use the free WiFi.
What Sort of People Live in Andorra?
People come from all walks of life in Andorra (as you’d expect anywhere). Obviously there are the Andorran born locals; some families have been here for centuries, others for one or two generations.
Historically people have emigrated from France, Spain and Portugal, but many also came from Great Britain. Nowadays, there are more and more from Eastern Europe, America, The Philippines.
Some are workers coming for a higher salary than elsewhere in Europe, some are perpetual travelers simply looking to plant a residency flag, others are looking for a lifestyle change where they can spend their time skiing, hiking, cycling or maybe learn a new language and settle into the simple life.
Some have enormous amount of money. Others are happy to own what is in their backpack and spend their Summers hiking around the country from camí to camí.
The good news, is almost everyone has an interesting story to tell. I’m yet to meet a dull person here!
So How Do I Get Residency in Andorra?
For a lot of people, residency has nothing to do with tax, while for others that’s the #1 motivator. Outside of getting a job for a local business, you have 4 options, split into 2 categories.
This is ultimately “Andorran tax residency”: for those that don’t necessarily want to be tied to the country for the bulk of the year but still want the taxation benefits of this beautiful country.
Passive residency requires you:
- to be in the country for 90 days each year
- to show proof of private health insurance, and
- means to support yourself and your family by depositing ~€35,000 + ~€11,750 per dependant into an Andorran bank
- Invest €350,000 into Andorra (buying a house is most popular)
- Pay a €50,000 bond to the government
- Start a company in Andorra
- Pay a €50,000 bond to the government
- Be a world class athlete, scientist, personality, etc. (yeah, me neither)
- to spend 183 days each year in Andorra (6 months)
to spend the majority of your year in Andorra (some have claimed 275 days but I’m yet to see written proof of this. It’s been suggested to me that so long as you travel to and from your home in Andorra, it’s fine to do business overseas and going on holidays)
- to join the local social security scheme – CASS – there are discounts (typically 50%) but long term the cost is ~€440mo per applicant, this does give you excellent medical coverage in Andorra, France and Spain and a pension if you stay for 20 years
Essentially the government is looking for residents to become part of the community and further the country.
2017 update: The door may be closing on affordable active residency, with the government floating the idea of a €30,000 bond to come in through this route. To my knowledge at time of writing this hasn’t actually been enacted, but if you are thinking of moving here it may be good motivation to do so earlier.
2018 update: Now a €15,000 bond is required for all active residents applying for “Compte Propi”. This is only for the shareholders of the company you are setting up who seek residency in Andorra. Dependants, whether they be spouses or children do not need to pay this bond.
- Start a company in Andorra, requiring €3,000 for share capital, or
- Invest in an Andorran company, owning 20% of this company or more.
We took the active residency route, as we had every intention of calling Andorra home, spending the bulk of our time within the borders and moving here for good.
After travelling a lot and being on that “where the f*ck is home” rollercoaster, we’d decided on spending a minimum of 9 months in one place (“home”) each year, only leaving briefly for some sun during Winter or to visit friends/family, I later stumbled on this post – it seems we aren’t alone.
Since settling into Andorra we’ve found ourselves less keen to travel. After a week away on business there’s nothing I look forward to more than a hike across the road from my apartment. Home feels like a holiday, even when we’re working!
The productivity from our time in Andorra is through the roof compared to time on the road where creativity is high. It’s a good mix. But, I digress…
How Much Does Andorra Tax Residency Cost?
This varies greatly depending on what you’re willing to pay for and how much you can do yourself. Are you only paying government fees? Or you want an English speaker to register a company, apply for your residency, social security, transfer your driver’s license, negotiate your rental contract, introduce you to a bank, etc?
If you’re an English speaker going for active residency, I’m going to say you need at least €21,000 all in. This includes your €15,000 government bond and €3000 in share capital which your company can use later.
If you’re getting lots of help or you have a wife/dependants, that could go over €30,000. Costs can add up, especially depending on where you are from. We needed plenty of original, apostilled certificates from Australia, and these were couriered to us so we didn’t lose time as they always needed to be within 3 months of issue – for my wife and I, these certificates were set us back over €500 (in Aussie dollars).
Keep in mind though, that in comparison to other first world countries, this is still very affordable.
How Long Does It Take?
This will depend on the visa you are going for as you need to wait for company registration first, but we’ve heard as little as six weeks and as long as nine months.
We applied over Christmas and had some delays as a result. In the end, it took around 6 months.
What Are the Downsides of Living in Andorra?
- It’s not well documented, and getting a clear answer on government policy can be hard.
- You can’t read a guide and easily relocate here, you really need to hit the ground and explore.
- You can’t rock up to an expat tech startup meeting here, more effort is required than most major cities.
- For those running a business, it can be hard to find software that works with local systems.
- Get used to explaining where it is (“No, it’s not in Africa!“).
- It can be tricky to get products shipped here.
- They still have 6 digit phone numbers – our old bank in Australia still can’t manage to figure out how to send SMS verification codes to Andorra.
- It’s a tricky place to learn a language. Despite Catalan being the official language, much of the country spends their day speaking Spanish or French. Or Portuguese. Or, to a lesser extent, English or Russian.
- If you travel a lot, maybe the 3 hour bus ride (or ~2.5 hour drive) at the end of your flight is a deal breaker.
So that’s the major points I can think of for now. If you have questions about living in Andorra or if you want to visit and check it out, leave a comment.
TL;DR. Andorra is a beautiful, affordable, safe place to live that is perfect for the location independent, with many, many opportunities to spend outdoors being active.
Still Have Questions?
If you are thinking of moving to Andorra and have questions about what it’s like to live in, getting residency, where the best areas to live are, or something completely different, please feel free to email me at email@example.com. I’ve learned a lot on the ground here and I’m happy to help.