What is the new €50,000 fee for entrepreneurs?
This measure, which recently came into force, consists of a non-refundable contribution of €50,000 that new self-employed residency applicants must make. Unlike the deposits or guarantees required for other types of residency, this amount is not returned at the end of the stay in the country. It is, therefore, a non-recoverable payment that adds to the other requirements and costs associated with obtaining residency in Andorra.
The main objective of this fee is to regulate the flow of new residents and ensure that those who settle in the Principality have a solid project and a real financial commitment to the country. However, the measure has not been without criticism, especially from tax and legal advisors, who directly manage the arrival of this foreign talent.
The Immediate Impact: Brain Drain and Innovative Projects
According to industry experts, the consequences of this new regulation have quickly become apparent. The main effect has been a direct disincentive for high value-added profiles who previously saw Andorra as an ideal destination. We are talking about digital entrepreneurs, new technology professionals, innovators, and startup founders who, while having viable projects, do not always have such a high initial capital for a non-recoverable contribution.
Albert Barroso, partner at Grup Abast, warned in statements to ATV that this situation creates “a perception of legal insecurity” that harms Andorra’s reputation as an international business hub. Regulatory uncertainty and stricter conditions are causing many potential residents to dismiss the Principality and seek jurisdictions with more flexible entry barriers.
Opinions of Tax Experts in Andorra
Pere Augé, CEO of Augé Holding Group, expressed similar sentiments, warning of the real risk of losing profiles with solid projects. “Individuals with projects in entrepreneurship, the digital economy, innovation, or new technologies are rethinking their plans. Some have even decided not to come,” he notes. This brain drain not only affects the arrival of new companies but also hinders the economic diversification that the country has been trying to promote for years.
Advisors agree that Andorra’s €50,000 fee acts as a filter that can exclude individuals with great capacity to add value but without the required financial muscle. This could lead, in the medium term, to a slowdown in growth in strategic sectors for the country’s future.
Why Has the Government of Andorra Implemented This Measure?
Although the original news does not detail the official arguments of the Government of Andorra, these types of measures are usually implemented with several strategic objectives in mind. It is important to understand the context to gain a complete overview of the current landscape for entrepreneurs in Andorra.
Generally, the motivations behind stricter immigration requirements can be:
- Foster sustainable growth: Control the arrival of new residents to avoid excessive pressure on infrastructure such as housing, healthcare, or education.
- Attract high-solvency profiles: Ensure that new residents and entrepreneurs have the necessary financial capacity not only to start their project but also to contribute significantly to the local economy.
- Combat speculation: Prevent residencies from being sought solely to obtain tax benefits without a real business project and roots in the country.
- Increase public revenue: Non-recoverable contributions represent a new source of direct income for the State coffers.
While these objectives are legitimate, the debate centers on whether Andorra’s €50,000 fee is the most appropriate tool and whether its negative impact on attracting innovative talent outweighs the potential benefits.
Is It Still Worth Moving to Andorra as an Entrepreneur?
This is the key question many are asking now. The answer is not simple and largely depends on the entrepreneur’s profile. Despite this new entry barrier, Andorra continues to offer very competitive advantages.
The Principality’s main appeal, its tax system, remains intact. Taxes in Andorra continue to be among the lowest in Europe, with personal income tax (IRPF), corporate tax, and VAT (known as IGI) having maximum rates of 10%. For companies with significant turnover and for professionals generating high incomes, tax savings remain a decisive factor that can amply compensate for the initial investment.
Additionally, other factors make Andorra an exceptional place to live:
- Quality of life: Citizen safety, a privileged natural environment, and a tranquil pace of life.
- First-class healthcare system: Internationally recognized for its efficiency and coverage. You can read more about the Andorran healthcare system here.
- Strategic location: In the heart of the Pyrenees, between Spain and France, with easy access to major cities like Barcelona or Toulouse.
For an entrepreneur with an established business or robust initial capital, the €50,000 fee might be a manageable hurdle within their business plan. However, for an early-stage startup or a self-employed professional looking to start from scratch, this amount can be prohibitive.
Plan Your Relocation with Expert Advice
The landscape for entrepreneurs in Andorra is constantly evolving. The introduction of the €50,000 fee demonstrates the importance of being well-informed and having professional, up-to-date advice. Regulations on residency and foreign investment can change, and navigating these requirements without expert help can be risky and costly.
At Andorraway, we understand the complexity of these processes. We analyze each case individually to offer the best strategy and ensure your relocation to Andorra is a success. If you are considering establishing your residency or business in the Principality, we invite you to contact us. Our team of experts will guide you through every step, from initial planning to your definitive establishment, ensuring you make the most informed and beneficial decisions for your future.