Proposed changes to passive and active residency requirements as they become clear
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The deadline for proposals and amendments has been extended 3 weeks until 2nd January 2023
The deadline for submissions for proposed changes has been extended another 3 weeks until 1330 on 2nd January 2023. This means that nothing can be decided until that date and it is expected if there is no further request for a delay that it will be set down for debate towards a final draft to agree proposals. The original deadline of 30/09/2022 has now been extended five times at the request of the Social Democratic Party. This delay of the submission period is welcome news to those scrambling to get papers together for the application. It would now appear that this will clash with the Parliamentary election calendar, elections must be called before March 2023. It is increasingly doubtful whether any changes will get thouh in this Parliament, but for planning purposes better to assume it will and act now.
The current situation and what changes may be implemented
The proposed amendment to change the investment requirement for passive residency as well as the bond for active residents was entered into Parliament on 6th July 2022.
In an opening gambit in September 2022 it was announced by the Minister of the Economy is that he proposed to double the cost of the current investment requirement from EUR400,000 to EUR800,000 and at the same time increasing the bond required for active residency from EUR15,000 to EUR50,000 per applicant.
Until 4th October 2022 amendments and proposals were able to be submitted for the Parliamentary debate as to what the final changes will be. This deadline has now been extended five times and is now set down for 02/01/2023.
One thing is certain is that changes are afoot but the details are as yet unclear. We are told that originally the Minister was considering EUR1 million as the minimum but the new potential EUR800,000 proposal is now also the subject of a number of ideas which are outlined below.
It should be stressed that all of current residents have historically remained on the terms under which their applications were processed and any changes will not be retrospective.
There is a distinct possibility that the elections due for March 2023 may be brought forward. If this happens then the government's attention will have to turn to the proposed government budget. If this is the case then these proposals may well be delayed. It does seem though that the policy of this government is to bring in these changes before the change in Parliament.
This proposed change in policy has been brought about by an overall review of the future of Andorra, the effect of current passive and active residency investments in the country, the state of construction and the state of the housing market amongst other factors which have been taken into consideration.
What are the current proposals before Parliament? - Passive residency Changes
The proposal to amend the law and increase the passive residency requirement has resulted in 59 amendments and proposals (as were announced up until 30th September 2022), During this period of passage in the Andorran Parliament where proposed amendments to laws are introduced, there is a period where all parliamentarians can get their own feedback and propose changes amendments and suggestions. That period has now been extended again until 2nd Januray 2023.
As reported the Minister of the interior has proposed to double the amount currently required for passive residency to EUR800,000. This it seems has caused some consternation.
One of the other 59 proposals is to require passive residents to invest EUR600,000 into the country (this is just a proposal from another member of Parliament), the EUR800,000 may well still stand. But this amendment arises from grassroots research, which is persuading the Minister that EUR800,000 would be far too drastic increase and would not lead to further investment.
On the other hand, the investment requirement may remain at EUR400,000 if the whole investment is made into a brand-new housing scheme which the government is scrambling to put together. In effect the passive resident would be investing 400,000 into a housing fund which fund would then be used to acquire low-cost housing which is more relevant to most of the Andorran population. This is described as a “SICAV” in the proposal and so conjures up the type of countrywide investment hopefully with a return on investment. It is clear though that this would take time indeed to set up.
Another proposal is that a minimum amount of EUR400,000 must be allocated to each property units acquired. Quite simply by purchasing one or two units of EUR200,000 each, neither would not qualify for immigration purposes.
Parliament seems united in amending the law to achieve greater investment from the passive residency investment requirements but it is quite clear that this may only serve to increase speculation as is reported in many papers.
Standby for an increase in annual income requirements for passive residents:-
One other matter to note is that they intend to make the minimum wage 60% of the average salary in accordance with the EU directives. This would affect passive residents, whether new or existing, since the bank certificate ( Already increased twice this year) represents a percntage of the minimum wage. As an example of what may happen ( and not yet fixed):-
300% annually of the minimum wage for a single resident curently 43,243.20 EUR would rise to 49,068.00 EUR and 400% for a married couple from 57,657.60 EUR to 65,424.00 EUR and plus 16,356.00 EUR for each dependent. And these figures do not take into account current inflation which is forecast to be about 5% this year by Fitch.
Possible other current proposals before Parliament - Active Residency Changes
Another proposal is to increase the required percentage of shareholding to 34% from the current 20%. This figure of 34% seems to be clearly designed to limit the amount of shareholders in any one company who would be able to apply for active residency to 2.
There is a further proposal that if the government agrees that the formation of a company is in line with their policy of promoting the digital economy, entrepreneurship or innovation which will lead to the employment of local personnel then this bond requirement would be waived.
Just how they will decide that seems a long way off.
This whole proposal to change active residency requirements is very much tied up with the overall law of digital regulation and the promotion of entrepreneurship within this sector. It extends from co-working environments which the government are keen to promote along with updating or introducing digital technology regulation.