1. Estate Taxation in Andorra
i. Lifetime gifts
In Andorra, there is no gift tax for individual residents; thus, any gift made in Andorra would not entail a tax levy. The donor will be subject to tax if the gift generates a capital gain. However, the Private International Law provides exemptions in the case of family transactions up to the third degree of kinship.
ii. Inheritance
There is no inheritance tax in Andorra.
The deceased is not subject to taxes for capital gains derived from the mortis causa transfer.
iii. Wealth tax
There is no wealth tax in Andorra.
In Andorra, there is no gift tax for individual residents; thus, any gift made in Andorra would not entail a tax levy. The donor will be subject to tax if the gift generates a capital gain. However, the Private International Law provides exemptions in the case of family transactions up to the third degree of kinship.
ii. Inheritance
There is no inheritance tax in Andorra.
The deceased is not subject to taxes for capital gains derived from the mortis causa transfer.
iii. Wealth tax
There is no wealth tax in Andorra.
2. Succession Planning in Andorra
i. Applicable law
The succession law applicable in Andorra will be the personal law of the nationality of the deceased. However, if the deceased has a proved closer relation with another country, its law will be applicable.
ii. Wills in Andorra
In Andorra, it is possible to organize the transmission of your estate through a Will which must comply with a certain number of rules. Wills can be prepared by the notary and signed by the testator, an Open Will, or prepared and signed by the testator and deposited with a notary, a Closed Will.
iii. Restrictions on freedom of disposition
The testamentary freedom restrictions in Andorra are regulated by Act 46/2014 “Llei 46/2014 de la succesio per causa de mort”.
The succession law applicable in Andorra will be the personal law of the nationality of the deceased. However, if the deceased has a proved closer relation with another country, its law will be applicable.
ii. Wills in Andorra
In Andorra, it is possible to organize the transmission of your estate through a Will which must comply with a certain number of rules. Wills can be prepared by the notary and signed by the testator, an Open Will, or prepared and signed by the testator and deposited with a notary, a Closed Will.
iii. Restrictions on freedom of disposition
The testamentary freedom restrictions in Andorra are regulated by Act 46/2014 “Llei 46/2014 de la succesio per causa de mort”.
There are two important compulsory restrictions on testamentary freedom in Andorra:
- one-quarter of the deceased’s estate must be transferred to his or her children or if none, his or her ascendants; and
- one-quarter of the estate must be transferred to the surviving spouse if the spouse does not have sufficient economic resources to maintain his or her economic standard of living.
3. Trusts and Foundations in Andorra
Trusts are not recognized under Andorran law since Andorra did not sign the Hague Convention of trusts and it is a civil law country. However, Andorran residents can be grantors or settlors or beneficiaries of a foreign trust.Law 11/2008, of 12 June, on foundations, recognizes private and public foundations. These legal entities must be focused on legal objectives of general interest and social activities.
4. Matrimonial Issues in Andorra
Regarding the matrimonial property regimes in Andorra, if the spouses have not entered into a pre-nuptial agreement, the general matrimonial property regime recognized in Andorra is the separation of property.Spouses can enter into a system of community of goods, but this must be requested and granted as a public deed before a local public notary.
Same-sex civil partnership are permitted and recognized in Andorra and have the same status as opposite-sex marriages. However, same-sex marriages are not permitted or recognized in Andorra.
The regime of “stable union” has the same effect as marriage for tax and succession purposes.
In Andorra divorce dissolves the financial marriage regime. In case of lack of agreement between the spouses the courts will make a decision taking into account which spouse will suffer a significant economic imbalance after the divorce.
For more details of Rosemont’s Estate Planning and International Private Law services see our dedicated page.
Please contact your local Rosemont office for assistance.
Articles and media of interest:
- Article Incorporation of companies in Andorra
- Article Why Andorra?
- Article Business in Andorra
- Article Taxation in Andorra