Introduction to Residency in Andorra and Its Legal Implications
The residency in Andorra is a topic of great interest for those wishing to move or invest in this small Pyrenean country, known for its attractive tax regime. However, not living effectively in Andorra can lead to serious legal and tax consequences, as demonstrated by a recent court case.
The Case of an Andalusian Entrepreneur and the Consequences of Not Residing Effectively in Andorra
An Andalusian entrepreneur, residing in Tarter (Canillo), was detained and imprisoned at La Comella prison while awaiting extradition to Jaén, Spain. He is charged with tax fraud, money laundering, and crimes against the public treasury. Although he invoiced through a company located in Andorra, investigations revealed he mainly lived in Valencia, raising suspicion and legal actions.
This case highlights the importance of complying with tax residency requirements in Andorra, since faking residency without effectively living in the Principality can be considered tax evasion.
Investigation and Judicial Process
The court investigating the entrepreneur has received an extradition request from Spain, which has 60 days to formalize it. Andorran justice considers that double criminality exists, a necessary condition to proceed with extradition to Spanish authorities.
Additionally, a search of the entrepreneur’s residence in Tarter was conducted, where documents relevant to the case are expected to be found, although the process remains secret for now.
What Does Not Having Effective Tax Residency in Andorra Imply?
- Tax fraud: Not spending the minimum days in Andorra to be considered a tax resident can be interpreted as an attempt to evade taxes in other countries.
- Money laundering: Residency simulation may be linked to financial crimes such as money laundering.
- Judicial cooperation: Andorran justice currently collaborates with Spanish authorities on fiscal crimes, increasing risks for those trying to evade the law.
Main Business Lines and Revenue from Andorra
In the mentioned case, the entrepreneur mainly earned income from:
- The sale of olive oil, especially to the United States, invoiced from Andorra to take advantage of tax benefits.
- Online sales of electronic devices such as mobile phones, smartwatches, and tablets, mainly imported from Asia and China.
These businesses reflect the common strategy of many investors and entrepreneurs seeking tax benefits in Andorra, but without effective residency, which carries legal risks.
Legal Consequences and Recommendations for Residency in Andorra
Consequences for those not meeting effective residency requirements in Andorra may include:
- Legal proceedings and potential extraditions.
- Significant financial penalties and criminal records.
- Reputational damage to individuals and businesses.
Therefore, it is crucial to properly plan your residence in Andorra and meet the established legal and fiscal requirements.
Requirements for Fiscal Residency in Andorra
- Reside more than 183 days per year in the Principality.
- Have an actual and real address in Andorra.
- Avoid having main economic activities or residence in other countries that could question fiscal residency.
For more tax advice in Andorra, see this guide on taxes in Andorra.
Quality of Life and Tax Advantages in Andorra
Andorra offers a high quality of life, with an efficient healthcare system and quality education, along with tax advantages that attract international investors and workers.
For those considering moving, it is highly recommended to inform yourself well about:
Conclusion
The residency in Andorra must be effective and genuine to avoid serious legal and tax consequences. The recent court case demonstrates that simulation can lead to extradition procedures and significant penalties.
For those wishing to take advantage of the tax benefits and quality of life offered by Andorra, it is essential to comply with legal requirements and seek proper advice.
If you plan to move to Andorra, consider consulting specialized guides and legal advice to avoid future complications.