While Monaco is a well known European tax haven, Andorra has
remained little known outside of the financial community -
despite enjoying the same tax advantages and arguably more
private banking than her better known rival.
In contrast to the similar financial benefits both Monaco and
Andorra residents enjoy, the two small countries have quite
different climates.
Monaco has good all year round weather and is located next to
the French Riveria, while Andorra is in the Pyrenees and between
early December and late April attracts nearly ten million
tourists for ski holidays. Monaco has year round tourists,
peaking twice a year in May for the Grand Prix, and September
for the Yacht Show.
Neither Andorra or Monaco have their own airports - Nice airport
has a helicopter link, a ten minute ride direct to Monaco,
Andorra is not so fortunate and the nearest airport is
Barcelona, a three hour drive away from the principality.
Both countries have opted to stay out of the EU, preserving
their ability to maintain a no income tax policy.
The biggest difference is the entry price for becoming a
resident - which entails buying or renting a house or apartment.
One bedroom apartments in Monaco start at 800,000 Euros, but in
Andorra the same size apartment starts at less than a third of
the price at 250,000 Euros. And while a house in Monaco is a
rarity, there is a good choice of houses for sale in Andorra,
with prices starting at under a million Euros.
Rising Prices
Given Andorra's property price advantage for would-be residents
choosing between Europe's primary tax havens, it has come as a
surprise to many that the closing costs for buying a property in
Andorra has not only been less than half that of Monaco, but
also less than buying a property in many other mainland European
countries at around four and a half per cent.
But Andorra has just raised property closing costs by
introducing a three and a half per cent sale of goods and
services tax on property purchases from January 1, 2006 -
bringing the tax haven more in line with neighbouring France and
Spain.
Demand for property in Andorra and Monaco is unlikely to be
affected by the recent increases though, according to European
tax haven specialists Tribune Properties.
'Andorra and Monaco have historically seen an increase in
property activity and residency applications when taxes are
increasing elsewhere. The new German government has recently
increased the top rate of income tax and the United Kingdom has
seen an increase in the number of indirect taxes, making the
zero per cent personal income tax both Andorra and Monaco offer
an attractive preposition to high income earners.
Andorra's property inflation has been over ten per cent annually
for the last three years, and when the 2005 figures are released
we would expect it to be four years in a row, with no sign of a
levelling off of demand for the year ahead.
With Andorra and Monaco's high speed cable and broadband
internet access more and more company owners are moving their
residence to low and no tax countries and running their
companies from a distance geographically, while being able to
share information with their head office in real time'.
As well as buying a property in Andorra or Monaco, both
countries require residency applicants to establish a local bank
account and deposit around 50,000 Euros (Andorra) or 100,000
Euros (Monaco), take out private health insurance, and to live
there for six months of the year.
About the author:
For an on-line guide to Monaco and Monte Carlo including a map,
the weather, flights and Nice Airport information visit
http://www.yourmonaco.com For Monaco real estate
http://www.monacoproperty.net , Andorra property
http://www.propertyandorra.com
