Foreigners wishing to extend their residence in Andorra or when applying for the first time, it will be necessary to prove a minimum level of Catalan. This is reflected in a new law being prepared by the Andorran government that makes it more difficult for those who want to settle in the country to move, for example, a few youtubers Spaniards who decide to move for tax reasons.

For people who can’t prove that they have this knowledge, Basic make it work 30 hour course in the Catalan centers of the country, according to Andorran newspaper who spread the news. However, they emphasize that the required level will be less than A2so this is a very basic scale by which the government seeks to preserve the state language.

The rule is expected to come into effect in 2024, when it is estimated that around 3,000 residence permits will be renewed. According to the Department of Statistics of Andorra, as of July 2023, the total population of the country is 83,990 people.

At the end of last year, Andorra also changed the conditions for obtaining a residence permit without an employment contract and through an initial investment, which increased from 400,000 to 600,000 euros. Then the principality sought to limit the growth in real estate investment that has taken place in the country in recent years.

These investments may be in real estate located in the Principality, in shares of capital or funds based in Andorra, in public debt, in life insurance products or in gratuitous deposits with the Andorran Financial Authority (AFA).

In this modification, it was also increased to Security deposit 50,000 euros that self-employed workers must pay a deposit to the AFA, so they want to avoid leaving debt if they leave the country after living in the country.

tax benefits

Andorra has been the destination of choice for many years for athletes, artists as well as youtubers to avoid the Spanish tax, as the country of the Pyrenees has tax advantages over our country. However, the Principality is not considered a tax haven.

In Andorra, personal income tax has a flat rate of 10% and 5% for incomes from 24,000 to 40,000 euros, which is applied through a maximum bonus of 800 euros. On the other hand, in Spain this tax has segments depending on income. The maximum rate is 47% for income from work exceeding EUR 300,000. This does not mean that 141,000 taxes are paid out of 300,000 euros, but that this percentage of tax will be applied to the part that exceeds these 300,000.

In addition to the personal income tax, Andorra also has differences in VAT. For example, in the case of advertising contracts, the VAT applied in our country is 21%, while in the Iberian country it is 4.5%.

Define residents, purpose of the treasury

The IRS stepped up its surveillance of YouTubers, who sometimes explicitly stated that the reason for their transfer was to pay less taxes. Since 2021, they have been using big data tools to check whether the respective assets that “move” their place of residence really live outside of Spain.

It should be noted that in addition to living abroad for six months, the tax office takes into account other factors when considering the residence of the taxpayer. In fact, the Treasury may consider that the relevant assets retain their location in Spain withoutif in our country the “center of activity” or interests. Aspects such as where the family lives or where they attend events are relevant to the Tax Agency in determining whether they need to pay taxes in Spain.

In addition, in March of this year, the Ministry of Finance published a note regarding the taxation of income received in Spain by non-resident artists and athletes. By artists, the Treasury refers to actors, musicians, DJs, as well as people who carry out activities “that have emerged with the development of new technologies and the use of so-called social networks.” Thus, This name will include content creators on platforms such as Instagram, Tik Tok or YouTube.

Thus, the income that these non-residents will receive from the implementation of activities in Spain will have rate 24% through the non-resident income tax (IRNR). Thus, the Tax Agency focuses on the income that these people, who declare that their place of residence is in Andorra or elsewhere, received from attending events or conducting economic activities in Spain.