e-Residency Andorra

The principality of Andorra attracted a lot of interest from professionals working online, due to the consideration of the implementation of an e-residency in Andorra. The electronic residency allows company formation without physical residence.

The Ministry of Interior and Justice in Andorra committed to studying the feasibility of e residency system following the Estonian model. The tiny Baltic country has been very successful with an e-residency program aimed at establishing e-commerce companies. Simple registration and company creation for a small fee (€100) make this option so popular among digital nomads, such as programmers, designers, digital marketers, and SEO professionals.

What is the e-Residency?

The electronic residency initiative aims to find new private investors from different countries, especially Europe and Asia. The easier it is to create a business with e-residency, the more companies will come to Andorra to set up online offices.

At the moment, Principality is certainly not the best example of a system with quick company creation, due to restrictive compliance controls introduced by the offshore banking Andorra. The process of creating a company in Andorra remains complex and slow. This seems contradictory after all the efforts made to encourage companies with substance in the country to switch now to a 100% offshore form of operation.

E-residencies pick up on the trend of digital entrepreneurs and nomads moving around the world without permanent residency in any country. Andorra Partner believes that simplified processes for company formation and a digital nomad residency model for e-businesses would be beneficial for Andorra as a potential economic hub for digital businesses.

Where Should e Residency Holders Pay Taxes?

However, anti-money laundering measures and monitoring of tax obligations for the beneficial owners of such companies are critical. Ensuring that owners of potential e-businesses pay taxes in the country of tax residency is not an easy task when dealing with individuals moving all the time.

The concept of digital nomads remains a complex issue as dividends distributed by an Andorran company are subject to taxation at the place of residence. The absence of a tax residence and therefore lack of tax declaration may attract negative press to Andorra.

How Does e-Residency Work?

In a nutshell, individuals interested in obtaining an e-residency, get a digital ID, allowing them to use digital online services worldwide. It is important to distinguish that the e-residency card is not equivalent to citizenship in the case of Estonia. As the project leaders have emphasized, residency is a privilege, not a right. The state reserves the right to withdraw the card if someone is interested in participating in dubious affairs.

The e-residency card, moreover, does not carry a person’s photo, therefore is not an identity card per se. However, an e-card is equipped with a chip, a personal code, and contains biometric data, such as fingerprints. Applications are processed by the Estonian Police and Border Guard. Security and background checks are carried out before approval.

E-Residency pros and cons

E-Residents have their financial footprint digitally monitored, in a manner implemented as transparent. The reaction to the widespread high-level financial misbehavior revealed by the leak “Panama Papers” has been a contributing factor to make the Estonian initiative clearer, more transparent, and simpler.

Note that e-residency has no effect on income tax, nor does it establish an obligation to pay income tax in Estonia, nor does it exempt from paying income tax in the resident’s home country.

An electronic residency allows the resident to register a company, sign documents, exchange encrypted documents, use Estonian online banking, complete local tax returns, and fill prescriptions. Other services will be available to the e-resident as appropriate or necessary.