On the global board, there are continuous voices that associate the success of business with an unfair and abusive tax agenda, without profit there are no taxes and with benefits it is time to pay, and, in fact, they present exile as the only way to survive in this situation.
Surely you have heard about the benefits of Ireland, Malta, Luxembourg, Abu Dhabi, the Isle of Man, Estonia or Andorra, for putting some of those destinations similar to paradises where everything, absolutely everything, seems designed to provide solutions to our problems.
Great entrepreneurs, influencers, consultants of all kinds and even the media, send a message, on more than one vehement occasion, where to prosper, to optimize the income statement of any company, or to achieve the long-awaited “tax freedom”, the only option is to pack up, abandon the known and cross borders fleeing from the evil of our legislators, sorcerers and witches with perverse potions that all they seek is to take away the money that is ours.
Regardless of irony or humor, controversy is served, with a common motto: ”Every man for himself.”
They have convinced us that offshoring, as a panacea, for any business or asset (medium or high) is the answer, and even more so if you are in Spain.
Who doesn’t remember the exodus to Andorra since 2020, of many YouTubers showing their dissatisfaction with the payment of taxes?
EL RUBIUS, for example, complained that the Treasury treated him like a CRIMINAL and, apparently, that was his reason for fleeing to the small neighboring country. Meanwhile trials for using unsuitable instruments to comply with their obligations and that has won the Administration with the consequent penalties and fines.
Large business groups and people with high net worth are also protagonists of this particular exile.
FERROVIAL moved its registered office from Madrid to the Netherlands, justifying it in terms of COMPETITIVENESS, with the idea of boosting its international business and listing on Wall Street, although its flight has not diminished its PRESENCE IN SPAIN, continuing with public CONTRACTS, private projects, cutting staff and being publicly represented by the CEOE. Therefore, they do not pay taxes in Spain, but they benefit from everything that the country can give them. Questionable from the ethical point of view, of course, but nothing to object to at the legal level.
At the end of 2023, it was published that Spain was losing almost 16% OF CORPORATE TAX due to the flight of corporate profits generated within our borders to other countries (in addition to the Netherlands, to those other countries that have been mentioned above or to tax havens) leaving about 4,000 million euros to enter.
The muli-millionaire JOSÉ ELIAS, with excellent results in his businesses, also exposes in networks his opinion:
“There are too many taxes in this country. With half of what we pay, I make this country work without any problems.”
However, he does not stop paying for them.
JUAN ROIG (Mercadona), expresses his need, and like practically everyone, questions the way they are used:
“It is necessary to be able to have the services we receive” and a “very good and very healthy” thing although “the problem is not paying a lot, the problem is how it is managed”.
And, of course, there are also streamers, such as IBAI LLANOS, who declares:
“I don’t care if they take half of it away because I’m still living with more tan enough.”
Faced with this gibberish, we take Andorra as a reference, and we are going to analyze its requirements, its pros and cons, so that we get a clear idea of what the transfer entails.
If you are looking for an active residence, which includes the employed and self-employed or entrepreneurs:
- REQUIREMENTS:
- Employment contract (for an employee’s account) with on-site development of the same.
- Development (for own account) of an economic activity by creating a company:
- Deposit with the Andorran Financial Regulator (AFA) of a deposit of 50,000 euros.
- To be an administrator of the company.
- Own more than 34% of the shares of the same.
- Contribute to the Andorran social security (CASS).
- Eligibility criteria for changing the tax domicile to Andorra:
- General rules of the OCDF, approved in the Personal Income TAX LAW OF ANDORRA.
- 183 days of actual presence at the end of the calendar year.
- Center of economic interest: the largest economic income must come from the Principality.
- The core of family or vital interests must also be in Andorra.
- Rental agreement or deed of a property certifying domicile.
- Certificates that prove that you have enough income to support yourself.
- Bank accounts in the country.
- Documentation of salaries, rents or any source of income and, in case of a company, benefit certificates or income statement, both internal and abroad (Form 720).
- Certificate of non-tax residence in the country of origin.
The passive residence can also be given, where retirees, people with passive income or entrepreneurs are located, also known as the non-profit residence, being recommended for retired people or wealth managers:
- REQUIREMENTS:
- Investment of 600,000 euros in real estate, shares in an Andorran company or in financial products.
- 47,500 euros on deposit with the Andorran Financial Regulator (AFA), deductible from the investment.
- Sum of 9,500 euros for each person who is in charge of the person applying for residence.
- Obligation of, only, 90 days of effective residence per year.
In common:
- DEADLINES FOR OBTAINING THE RESIDENCE:
- Active (workers and employers): From 2 to 4 months
- Passive (investors and pensioners): From 3 to 6 months.
- By investment: From 2 to 3 months.
- Entrepreneurs: From 3 to 5 months.
- BENEFITS:
- Maximum rate of 10% on income (the first € 24,000 are exempt and up to € 40,000 is taxed at 5%) while in Spain it can exceed 45%, and therefore there are significant savings in thousands or millions of euros (depending on income).
- Corporate tax at 10% versus 25% (or 15% in newly created companies) in Spain.
- There are no estate and inheritance taxes.
- they do not evade taxes, but elude them (in a legal way) by fulfilling residency requirements.
Our country is clearly losing out in the comparison. Apparently… we’ll see him at the end.
- POSSIBLE OBSTACLES WHEN LEAVING FROM SPAIN:
- The residence must be justified with full transparency, according to ARTICLE 9 OF LAW 35/2006, of November 28, on Personal Income Tax (IRPF):More than 183 days of the calendar year in Andorra, or what is the same, if you eat and dine in Barcelona every day, it is not very credible that you are visiting.Personal relationships must be maintained, which means that, if you have a partner, you don’t each sleep in one country.
- If the economic activities or interests (contracts or jobs) – what is called the object of wealth – are carried out in Spanish national territory, the transfer is not considered real, and there is a crime.
Likewise, the TIEBREAKER CLAUSE, which contains the double taxation agreement signed between both States, results, in its point 2 of Article 4, in the same, in addition to the requirement of permanent housing.
In the case of living in both countries, the premium is where you have the nationality.
For example, if you have another home in Spain, a Spanish-language channel and sponsors who sell on the national market, it is very possible that you will become a target for inspection.
The standard of living is slightly higher than Spain and there are problems with housing, being a scarce commodity in Andorra, although if you earn a lot of money you can possibly overcome those limitations.
In addition, there has been a new requirement: to demonstrate a CATALAN LEVEL for new residents.
Could it be the case that the Treasury waited 5 years to do an investigation with regularizations and sanctions to exemplify the population with some ’youtuber’ especially media?
Obviously, yes.
The Treasury has specific lines of control, such as the CENTRAL COORDINATION UNIT FOR THE CONTROL OF RELEVANT ASSETS, created within the NATIONAL FRAUD INVESTIGATION OFFICE, which will investigate risk profiles, with means of proof at its disposal.
We must not forget that these professionals have a public life in networks, where metadata can be applied to know exactly where they carry out their work and generate their profits, where they make their payments, or where their consumption is (phone, electricity, food, leisure …), and that’s the most basic thing, which then everything can become more sophisticated.
Therefore, if analyzed in detail, it could be said that this flight into fiscal exile is, in fact, an expensive shortcut.
Even when he turns around, as was the case with SHAKIRA, justifying that his residence was the Bahamas, and not Spain, although he had to finally agree on a fine and penalty, or MESSI, with the payment of his image rights.
In addition, it should take into account that “tax exile” strips you of other valuable elements that are not even mentioned:
The “fiscal exodus” is a dominant narrative, yes, but its long-term human, social and strategic cost is rarely questioned if, as is the case analyzed, you go to Andorra.
What about legal security, support network, quality of life, cultural connection, ultimate purpose?
Is it really “growing up” to give up the stability of your country, the talent ecosystem, the familiarity of your legal and cultural environment?
That search for tax optimization, when it becomes a blind flight, can disorient you, disconnect you and, paradoxically, make you less free.
A lower tax rate is sold, but you forget to mention the cost of uncertainty, bureaucratic complexity in an alien environment, or the erosion of your roots and your well-being.
Of course, you can adapt and even consider that you live better, but is the price of a lower percentage really enough to sacrifice the life you want to build?
We have been educated to think of “tax havens”, or pseudo—paradises, as far—flung, almost mythical destinations, shrouded in an aura of secrecy or even illegality in the style of a pirate movie adventure, but the real challenge is not to find a place to pay less, but a place to create more wealth – not only economic, but also social, intellectual and personal – in a transparent, legal and sustainable way.
And best of all, why that internal and external exile when it is not necessary to leave even Spain to have the best taxation in all of Europe?
Where?
Read our post about THE CANARIAN SINGULARITY, and you will be surprised how close you are.
*This post is property of TODO ES SINGULAR, S.L. (https://todoessingular.com/en/) and the information contained may be used by third parties with the express written authorization of the source.
