The Andorran law on inheritance tax for the expatriates

Have you opted for expatriation in Andorra and are you wondering about inheritance taxes in the country? Be aware that the Andorran law is very clear and very simple on this subject: if you have obtained the status of resident in the Principality, the inheritance is free of tax! This is one of the many tax benefits the country offers. Let’s go back in more detail.

What does the Andorran law on inheritance say?

How are inheritance taxes calculated in the Principality? What is the tax rate applied in the country for children, spouse or someone who has no direct relationship with the deceased? What does the Andorran law say about the deadlines for payment of inheritance tax?

Expatriation in Andorra: No tax on inheritance!

These questions often come up in the minds of people who have chosen expatriation in Andorra, and the answer to all these questions is clear: in Andorra, there is absolutely no inheritance tax, nor any tax on donations between people. On this point, you can forget the problems of calculations, rates and expiry! Although it is important to keep in mind certain rules and standards in force in the Principality.

Andorran law and special regulations for specific objects

Drafting a will: How to proceed when you are an expatriate in Andorra?

Two types of wills are possible when you have expatriate status in Andorra:

• the notarial will: it can take two forms, open or closed. In the first case, it is written by the notary according to the will of the testator. In the second, it is written by the testator and then submitted to the notary. The first solution is preferred because, carried out by a professional, it provides more guarantees in terms of compliance with Andorran law.
• the holographic will: like the closed will of the notary, written by the testator’s own hand, mentioning the date and place of establishment of the act. The holographic will must then collect the authentication of the Andorran Justice authorities before being incorporated into the notarial protocol.

Absence of will

A special provision on property acquired by family donation is included in the framework of Andorran law. This so-called reserved property law is applied in the case of absence of a will or an estate contract. It stipulates that these goods return to the family from which they come in case of default of descendants.

The transmission of heritage during their lifetime according to Andorran law

According to Andorran law, the transfer of wealth is possible during their lifetime through an «inter vivos » sale, exchange or donation.
In order to proceed to the transmission in the rules, whether free or not, it is advisable to use the services of a notary who will register the transaction to the various registers of the Principality. In addition, you will receive valuable advice before, during and after the act. Its drafting will also conform to the formalities of the communications imposed by the Andorran law: Land registry, Cadastre, Register of investments, etc.

Expatriation in Andorra: how does this happen if you do not obtain tax resident status?

European inheritance law

If you are not the holder of the tax resident status in Andorra, whether you are a liability holder or an asset holder, you must comply with European inheritance law. Since a revision dated August 17, 2015, the text provides that "the civil settlement of inheritance tax will depend on the law applicable in the state in which the deceased had his habitual residence at the time of his death."
In order to know the various provisions of European inheritance law, please refer to the dedicated website.

The example of France: Who must pay the inheritance tax?

Unlike the law in Andorra governing inheritance, the French regulation obeys article 750 ter of the general tax code. The text thus provides that inheritance tax must be paid from the moment:

• the deceased has the status of tax resident in France;
• the heir or the donee is a tax resident in France;
• the movable property or immovable transmitted is located on the French territory.

This is a key difference with the Andorran law, which provides no tax for this type of situation. Remember that, if you have made the choice of expatriation in Andorra, a double taxation agreement exists between the two countries. It is applied in the field of inheritance rights.