In the growing concern to maximize your business potential, your return on investment and your available capital, you likely have done a lot of research. It is likely that you’ve read several if not dozens of business books. Perhaps you heard of moving to Andorra before stumbling upon this website.
Perhaps even, you have attempted to learn all of the hooks and crannies of your country’s tax system, which was likely quite the mental strain. It is even likely that you considered relocalization, but where to ?
You’d need a place that is definitely worth the cost: it would be unwise to move for a mere 2% difference in tax brackets, which future laws could overturn anyway.
Relocation is only worth it when there is more than just a tiny difference in your tax burden, and moving to Andorra definitely will bring you more than just a breather in your tax payments – it will feel like giving an oxygen tank to a mount. Everest climber: true relief.
Since you are on this site, you’ve either been eyeing relocation to Andorra for a while or are completely new to the subject yet stumbled here. In any case, we shall explain to you why we think moving to Andorra might be the best move you can possibly do for your business.
Why is moving to Andorra a good idea ?
There are several reasons why.
Possibly the most enticing and convincing reason is Andorra’s tax system, which you can learn more about here. We have also made a calculator that compares the tax systems of a few countries to Andorra’s, available here.
Depending on your income and how it is taxed, you could save up to 90% of what you pay in taxes within your current jurisdiction.
Successful businessmen tend to manage their company’s liquidity through investments: index funds, ETFs, bonds and other types of securities. Rest assured that, in Andorra, the tax on capital gains is 0% (except real estate) for individuals and companies. You literally pay nothing. It literally cannot get better than this.
Opportunities are made and done in Andorra. Andorra’s charm has won the hearts and bank accounts of many entrepreneurs and businessmenl, mostly from Europe. What is the natural result of getting many goal-driven people in the same geographical area ? You get an effect of networking and opportunities arise quicker in these sort of scenarios.
Securing favorable deals, job positions and information is not something that relies exclusively on your actual qualifications, your skill and experience. It would perhaps be idillic, but we are social beings and therefore this social aspect plays a massive role in your success: it’s not just what you can do, it’s who you know.
How much taxes can you save up by moving to Andorra ? an example
Practical people need practical examples.
This example is directly taken from our calculator. Let’s say you are a U.K. based business. You live in Scotland, and take 90,000£ of “salary” from your company. Your company makes 250,000£ a year, and your stock market plays earn you 38,000£ in a given year. You have a trusty employee whom you pay 60,000£ a year.
In the U.K.:
You’d be paying 25,379£ in personal income taxes, compared to 5.800£ in Andorra.
You’d be paying 47,500£ in corporate income taxes, compared to 25,000£ in Andorra.
You’d be paying 13,716£ in capital gains taxes, compared to 0£ in Andorra.
You’d be paying Social Security 8,280£, compared to 9,300£ in Andorra.
This amounts to a grand total of 94,875£
In total, you are saving up 54.775£ per year in taxes, or 42,26% less. To be honest, the U.K.’s tax system itself already is on the better side of what Europe can offer, it definitely isn’t a tax hell – despite that, Andorra can almost split your tax payments in half in this scenario.
Larger companies; stock, bond, forex traders can definitely end up paying a lot less than 42% of their current payments. As we discussed earlier, stock traders would pay nothing at all.
To whom is moving to andorra the perfect move ?
As with everything in life, some things are better for some than others. Moving to Andorra definitely is the best option available today for anyone who is a sole entrepreneur within the services industry.
If your company can relocate with just you, the process is far easier than having to displace employees or negotiate a different deal with them since your company is moving away.
Of course, the agricultural or industry sector would have a tough time relocating, if it’s even possible at all. Geographically, Andorra doesn’t have vast farmlands or vast plans where large factories can be built.
Therefore, the services industry is the best suited for moving to Andorra. Within these, sole propietors, due to the easiness of transitioning from one country to another, have the easiest path ahead.
Other service-industry firms that do remote work are among the easiest to relocate as well. For example: Tech-related jobs, digital entertainment, finance, traders, etc.
Retailers can also benefit from moving to Andorra, but it does have more of a high risk to high reward scenario. Andorra, despite being a country with 80,000 inhabitants, gets millions of tourists every year.
Many of these are commercial tourists, looking to hop into the Andorran territory to buy what they want for cheaper: this is due to Andorran V.A.T. being at 4.5%, compared to Spain’s 21% and France’s 20%.
Are there any risks related to moving to Andorra ?
There used to be. Over a decade ago, you needed a local partner, resident that would sponsor your arrival and residence. This created a lot of dependancy for the foreigner on this local person who now had a lot of power over the immigrant.
These laws are no longer into effect. The risks that exist rely solely on the possibility of your entry application being denied. The Principality of Andorra is not a constituant of the Schengen Agreement; they have their own immigration policy and borders.
How much does moving to Andorra cost ?
The costs come from two types of expenses: lawyer-related costs and banking-related costs. A lawyer, or rather, a law firm is going to charge you for the procedures demanded.
Also, the banks will require you to lock some amount of funds with them for a certain period of time.
You can avoid having an amount of your funds locked if your entry in Andorra is backed by a job offer granted by an Andorran business.
