Patrícia Nogal, founder of the NODUM CORPORATE group of companies, gave an interview to the French newspaper Le Figaro, which we translate below. We thank this media for their kindness in allowing us to publish the content on our blog.
Here you can listen to the full interview in French.
“Andorra can be seen as a safe. If you want to create a company in Andorra, make investments and not touch them; it is a very well protected treasure.”
Patrícia Nogal, CEO, and co-founder of NODUM CORPORATE.
Patrícia Nogal began her career in financial advisory, evolving in private banking. Her experience and keen business sense led her to run a wealth management company, before co-founding her financial advisory firm, KUDO INVEST. In 2021, she took a new step by founding FIDENCIS, a NODUM CORPORATE group company, through which she helps families and entrepreneurs set up in Andorra. Here, she addresses the challenges of expatriation in the Principality, a destination that offers numerous tax advantages for both individuals and legal entities.
First of all, Patrícia, could you introduce us to the activities of the NODUM CORPORATE group? And more specifically, how do you accompany French and foreigners in their installation in Andorra?
Patrícia Nogal: Let me start by going back to the origins of the NODUM CORPORATE Group, as they are essential to understanding our values and our approach to clients. The Group began with KUDO INVEST, a company specializing in financial advisory services, which is my basic profession. At the same time, ESTRINT, a real estate project management company run by my partner, who is also a co-founder of the group, was created. The combination of these two great universes, financial and real estate, has allowed us to create a unique investment offer in Andorra. It has also shown us the importance of developing support services for local or foreign investors wishing to settle in Andorra. They were often advised only from a purely administrative point of view, without having a sufficiently deep vision of the client. And yet, this is fundamentally necessary if we want to avoid numerous problems in the path that an expatriate must follow.
That is why FIDENCIS was born, the company through which we offer legal and tax advice and a complete accompaniment to expatriates, with the rigor and values of a financial company. What makes FIDENCIS different is that we never start advising from the Andorran side; we always do it from the home country side where the fiscal exit will take place. Getting the departure from the home country right is the only way to ensure that the expatriation in Andorra will be successful and will certainly avoid several financial and tax problems in the medium and long term. Then, as I often say, the Andorran side is the easy side!
You also advise your clients on a key stage of expatriation, which is determined before arriving in Andorra: The residency status. Which means that you must determine whether the residency will be active or passive. Can you explain a bit more about the implications and challenges of each status?
Patrícia Nogal: Yes, indeed, as you rightly say, this is a key point that has sometimes been underestimated. Often, the expatriate chooses the status before receiving advice on which one suits him or her best. And sometimes, this choice is wrong.
In general terms, on one hand, we have the active residence. This modality is when someone comes to Andorra to carry out an economic activity. In other words, it is through the creation of an Andorran company that will have to have a turnover and pay its taxes, on which the government will give us the residence authorization.
On the other hand, we have what is called passive residence, which is another modality of residence without work. With this one, therefore, one will not be allowed to work in Andorra. And to obtain such status, it is necessary to make a minimum investment of 600,000 euros in Andorra. An investment that can be made in different ways: real estate, financial or even through the participation in the capital of an Andorran company.
To be able to offer good advice, it is always necessary to know the client’s project well, its resources to execute it and the necessary commitment to bring it to a successful conclusion. We can never generalize. From there, we will decide which expatriation model is the most appropriate: active or passive. Or if, on the contrary, expatriation is not possible. Then we will have to consider the project in Andorra as a non-resident one, which is sometimes one of the best solutions at first.
Do you have any examples you can give us?
Patrícia Nogal: We can take the example of a retired couple wishing to settle in Andorra. The general approach would probably be to say that they should choose a passive residence status, as they are not going to carry out an economic activity. However, this would not be the best advice as if this couple actually wants to come to Andorra with a project to manage their financial and real-estate wealth, they could establish themselves with the status of active residents by creating a wealth company through which they could manage all their assets.
“Andorra’s reception capacity is not infinite. Today, it is a very favorable time to expatriate, but we cannot guarantee the permanence of these facilities “. Patrícia Nogal, CEO, and co-founder of NODUM CORPORATE.
Andorra stands out for its favorable tax policy for all income levels, which is not always the case in other countries offering tax incentives to attract active residents. So, who can be found in Andorra and what kind of profile is attracted by these advantages?
Patrícia Nogal: Yes, exactly, unlike other countries such as Switzerland or Monaco, Andorra remains accessible to a very broad profile of residents. Andorra thus attracts profiles such as digital nomads, influencers or freelance consultants who often need very little structure to do their work. But also, start-ups, established companies in the medical field with human capital-intensive research and development departments or holding companies. However, there is one very important point to note: Andorra’s capacity to host is not infinite. The resources of a country of 85,000 inhabitants and 468 km² are obviously limited. Today, it is a very favorable time to expatriate, but we cannot guarantee the permanence of these facilities. In the short term, we foresee that our government will start to tighten the entry conditions, probably by adopting a model with much higher requirements.
Have these profiles evolved over time?
Patrícia Nogal: Yes, and it is a positive evolution for the country, as the evolution is qualitative. To understand, Andorra did not open its economy until 2012. Before 2012, Andorra was a country totally closed to resident or foreign investors. Ten years ago, the interest in Andorra was mainly motivated by tax optimization, without a real tax residence establishment. But in recent years, the situation has evolved considerably. And today, new residents are mainly attracted by our quality of life, composed of high levels of security, as well as a very competitive tax framework within the European Union. And from a social point of view, previously, we had mainly individual entrepreneurs moving on their own. Whereas now we are seeing more and more family relocations. Last year we had 1,012 foreign investment requests, of which 242 were French nationals.
In Andorra, you can fiscally optimize almost everything, including the company vehicle. Once you have formed a holding company, for example, what is the best thing to do? If you want to open subsidiaries in other countries, with which countries does Andorra have advantageous bilateral agreements?
Patrícia Nogal: Certainly, one cannot talk about Andorra without mentioning the simplicity of its tax system. Andorra, while complying with OECD standards, has only four taxes in force: corporate income tax at 10%, personal income tax (IRPF) limited to 10%, non-resident income tax at 10%, and the general indirect tax (IGI), equivalent to VAT, at 4.5%. That is why I always say that, in Andorra, there is no need to waste time with tax optimization. We are happy to pay these taxes because they are fair, especially when you consider the quality of life, as well as our health and education system.
What are the advantages of a holding company in Andorra? In some countries, such as France, the assets of the holding company can be withdrawn tax-free after x number of years, without being taxed. What are the particularities of Andorra in this regard?
Patrícia Nogal: It is true that an increasingly recurrent case is that of businessmen who decide to transfer their holding in Andorra and keep the subsidiaries in France or in other countries if their business is international. In this case, it is worth remembering that the tax on dividends in Andorra is 0%, as well as the tax on donations and inheritance. Andorra also currently has 17 agreements signed to avoid double taxation and negotiations are continuing with several countries (see list at the end of the article). With all these agreements, Andorra is increasingly competitive for the creation or transfer of holding companies, with significant tax advantages if the owner is fiscally resident in Andorra.
Since we are talking about moving assets, what can foreigners expect to find when moving their financial assets to Andorra? What is the banking scenario like?
Patrícia Nogal: We currently have three banking groups in Andorra, following a period of mergers and acquisitions like what has been observed worldwide since the financial crisis. The banking sector is one of the Principality’s main economic drivers, contributing 14% to the country’s GDP.
It is important to remember that Andorra is no longer considered a tax haven since 2016-2017 and that the country has lifted its banking secrecy. These changes have contributed positively to the country’s economic openness and improved international relations. One of the attractions of the Andorran banking sector is its solvency, with a ratio (CET1) of 17% on December 31, 2023, compared to 15.5% on average for banks in France. As a financial advisor, I believe that, in addition to the soundness of the Andorran financial system, one of the advantages is that Andorran banks, through independent managers, offer access to very attractive financial investments in terms of profitability. These opportunities, in countries such as France or Spain, would be reserved for institutional investors.
Is it necessary to be a resident to benefit from the advantages of Andorra?
Patrícia Nogal: This is an excellent question. To fully benefit from the Andorran tax framework, you need to be considered a tax resident in Andorra, which implies moving your center of economic and vital interest to Andorra. One of the key points for this is to reside in Andorra for more than 183 days a year. However, nothing prevents a French person from creating a patrimonial company in Andorra, through which he/she can make financial or real-estate investments, which will be taxed at 10%. Graphically, it is like having a safe in Andorra: as long as the dividends remain untouched, the savings accumulate.
What about buying real estate in Andorra? Is it a stable market, speculative, seasonal or a luxury segment? What is worth buying right now? And, above all, what do you offer through the NODUM CORPORATE group?
Patrícia Nogal: The real-estate sector is one of Andorra’s major attractions. In 2023, out of 1,012 foreign investment requests, 430 were related to the purchase of one or several real estate properties. Personally, I am very optimistic about real-estate investments in Andorra because unlike other countries such as Portugal or Dubai, the rise in prices in this market is due to a real demand for housing and not speculative investments. When the demand comes mainly from new residents with a real need for housing, and we are in an area where land is really limited, we have the two ingredients for this price rise to be sustainable. Even in a pessimistic real-estate crisis scenario, such as the one in 2007-2008, prices did not really go down, but rather stagnated, because the scarcity of land makes the law of supply and demand work very well. In the NODUM CORPORATE group, we have a competitive advantage in this sector, because we are owners of land that we offer exclusively to our investor clients, allowing them to develop their real estate projects through us.
To conclude, what would be the motto of the NODUM CORPORATE group? How do you see expatriation in Andorra?
Patrícia Nogal: Our motto would be: intelligent synergies. To conclude, if I had to mention a strong point of the group, it would be that NODUM CORPORATE allows people and companies setting up in Andorra to have a single interlocutor with a long-term global vision, while being highly specialized. We offer solutions to all your needs.
List of countries with which Andorra has signed a double taxation agreement (DTA):
- France
- Spain
- Portugal
- United Arab Emirates
- Luxembourg
- Croatia
- Belgium
- Liechtenstein
- Malta
- San Marino
- Czech Republic
- Monaco
- South Korea
- Chyprus
- Hungary
- The Netherlands
- Iceland
