Category B (Digital Nomad)
Digital Nomad Category – the proposal as we know it.
The first thing to make clear is that the law has been passed and a quota (only 50!) issued for the new category of digital nomad, but the regulations that will state what the specific requirements will be, have not yet been issued for immigration and they will not be issued until after the parliamentary elections set down for April 2023. This may well involve changes in policy depending on the results of the election, so nothing in this category is set in stone. Other websites are already excitedly promoting this category but for the moment as laid out here, applications are not yet possible.
What is the intention of the law for digital nomads?
The government has attempted to set up a similar scheme adopted by Estonia which encourages the digital community to choose Andorra as its base by offering favourable conditions. It is proposed that the new category will be a passive residency category but without any requirement for the 50,000 EUR deposit/bond payable to the government as in other categories where companies are involved. There will be no necessity for a full-term rental contract, and registered co-working spaces will be allowed.
They will adopt the 90-day rule similar to other categories in passive residency, proof of the annual 300% or 400% income will be required together with private medical insurances and a full set of Apostillised/legalised police and civil status certificates. There is no mention of the requirement for any company formation so in effect this looks like this may take the form as an ”autonomo” equivalent in Spain,
So, what is the catch, or what are the catches?
The main catch now is we do not know exactly what will be required for approval in this category in terms of being accepted by government that you are a digital nomad. It is likely that this will be a type of business plan outlining who you are, what you do, why Andorra, past and future potential earnings, and other relevant areas enough for a committee in government to decide that you can have approval for residency in this category.
This category of digital nomad seems to be alligned very much with the existing category B company formation, the residency would be for a period of 2,2,3, and then every 10 years, but to avoid paying the 50,000 EUR bond/deposit as in Category B and D, I suspect the bar will be high and that a very persuasive argument will need to be put forward. They are not going to make this easy as an alternative to avoid paying the bond.
As with the Category B (company formation) the full application will most likely need to be submitted before an application will be accepted. There is a large interest and excitement about this category, I know from personal feedback but until it is announced exactly where and how high the bar is we can only speculate.
Another area of concern will be the attitude of the banks and being able to open a local bank account. Given that the banks are so strict on proving existing fiscal residency in a third country, and proof of origin of funds, and given the inherent difficulties of tracing online revenue this may prove to be more difficult than the government thinks. Having said that we believe in this area there may be a workaround.
The law of passive residency as it stands means that a passive resident is not allowed to take any salaried employment in Andorra. Even in category B (company formation) a salary payment is treated as a dividend for accounting purposes. As yet it is unclear how this category B (digital nomad) will be treated for tax and accounting purposes. If immigration also adopts the similar 85% business outside Andorra rule this is going to be very complicated at renewal, especially as in many areas invoicing may not be available with revenue in the form of subscriptions and otherwise.
If this category proves to be interesting for those already on category D, active residency, any application is likely to require a completely new application with full certificates as with current policy of changing between active and passive and vice versa. If the application is successful, then there will be the further step of recovering the government deposit payment.
This is clearly a positive commitment from the government that acknowledges the importance of the digital online community and the need to attract this type of business to Andorra. As always, the devil will be in the detail. This new category will need to be as straightforward as can be possible but if it takes a similar format to the existing category B (company formation) it will become unnecessarily complicated. We will need to wait until later in the year to see how these proposals are furthered, and whether new policies for the regulations are brought in by the elected government.
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