Andorra has been successfully acting as one of the safest tax havens in the world. Even more surprising are the news that in the 2016 there will be introduced a tax on income of individuals. This is not the first reform carried out by the tiny state in two years, but its appearance caused a laughing concern of investors ee24.com reports with reference to The New York Times.
However, real estate agents do not note any significant reductions in sales. The conventional wisdom is that, even with the introduction of the new tax Andorra will remain the country, which can be a good save on taxes.
Andorra's main source of income still is tourism. Each year at least 10 million visitors come to the country. Absence of tax on personal income has attracted wealthy people who preferred Andorra to other tax havens such as Monaco, in particular due to lower prices of housing. They are now at the level of €1,000-7,000 per sq.m.
Foreign investors prefer to settle in the popular ski resorts of Soldeu, La Massana and Ordino. You can purchase one-bedroom apartments of 87 sq.m. for not less than €165,000, and luxury homes and apartments can cost €1-3,5 million.
The new income tax is introduced only for individuals, residing in the country for at least 183 days a year. The tax will be levied as follows: the first €24,000 will be exempt from tax, the next €16,000 is taxed at a rate of 5% for the remaining amount after deduction of these €40,000 the rate is 10%. This is one of the smallest tax rates in all Western and even in parts of Eastern Europe.
Most of the local real estate buyers do not work in the country, so the tax will pass them by. In addition, the Government of Andorra simplified the laws on obtaining a residence permit and foreign investment. Nowadays one can apply on the residence permit while living in the country for 90 days per year, compared with 180 days that were required before. Also, now, foreigners have the same rights to own property in the country with its citizens.
Text: Ivan Ulitin, ee24.com
Photo: realtystarter.ru