Dubai vs Andorra for Business Relocation: Tax, Lifestyle & Cost Compared

Corporate Tax

Dubai: 0% for qualifying free zone companies, 9% for mainland companies on profits above AED 375,000 (~$102,000). The 0% rate requires adequate substance and compliance with qualifying income rules.

Andorra: Flat 10% corporate tax on all profits. A simpler system with fewer conditions, but a higher headline rate than Dubai's free zone option. Certain income types (e.g., from intellectual property developed in Andorra) may benefit from reduced rates.

Personal Income Tax

Dubai: 0% personal income tax. No tax on salary, dividends, or capital gains for UAE residents.

Andorra: Progressive personal income tax up to 10%. Income up to EUR 24,000 is tax-free. Income from EUR 24,001 to EUR 40,000 is taxed at 5%. Income above EUR 40,000 is taxed at 10%. Capital gains and dividends are generally included in personal income.

VAT / Indirect Taxes

Dubai: 5% VAT on most goods and services. Free zone to free zone transactions may be zero-rated.

Andorra: 4.5% IGI (General Indirect Tax), one of the lowest in Europe. Some products carry reduced rates.

Tax Treaties

Dubai: UAE has over 130 double taxation agreements. Strong treaty network for international businesses.

Andorra: Limited but growing treaty network (around 10 treaties). Andorra has agreements with key countries like Spain, France, Portugal, Luxembourg, and UAE. The smaller network can be a limitation for some structures.

Company Formation

Dubai: Total Year 1 costs (license, office, visa) typically range from $10,000–15,000 in government and third-party fees, plus Vector's setup fee starting at $7,500.

Andorra: Company formation requires a minimum share capital deposit of EUR 3,000 and a registered office. Government fees, notary costs, and registration typically total EUR 3,000–5,000. Vector's setup fee starts at $6,900. Additionally, Andorra requires a deposit of EUR 50,000 with the government's financial authority (AFA) for active residency, which is refundable when you leave.

Ongoing Annual Costs

Dubai: $7,000–11,000/year for license renewal, office, and visa maintenance.

Andorra: EUR 4,000–8,000/year for registered office, accounting (gestoria), social security contributions, and company maintenance. Social security contributions for self-employed individuals are approximately EUR 500/month.

Dubai Residency

Residency visa is tied to your company license. You must visit the UAE at least once every 180 days to maintain your residency visa (though for tax residency purposes, 183+ days per year is recommended). The process takes 2–4 weeks.

Dubai offers flexibility: you can travel extensively while maintaining your base. The city is a global transit hub with direct flights to virtually everywhere.

Andorra Residency

Active residency (residencia activa) requires you to live in Andorra for at least 183 days per year. This is strictly monitored. You must also demonstrate that your main economic activity is conducted from Andorra.

The residency process takes 3–6 months due to government processing times. You'll need a local registered office, proof of housing (purchase or rental), a clean criminal record, and health insurance.

Andorra's location between France and Spain means easy access to Barcelona (2.5 hours), Toulouse (2 hours), and ski resorts at your doorstep.

Dubai Lifestyle

Year-round warm weather (40°C+ summers, mild winters). World-class dining, shopping, and nightlife. International community — 90% of residents are expatriates. Modern infrastructure and smart city services. Potential downsides include extreme summer heat, high cost of living for premium neighborhoods, and a car-dependent city.

Andorra Lifestyle

Mountain lifestyle with skiing in winter and hiking in summer. Clean air, low crime, and a family-friendly environment. Proximity to Barcelona and southern France. Small community (approximately 80,000 residents). Potential downsides include limited nightlife and entertainment, small job market for dependents, and the need to drive for most activities. The country has one main road — this is genuinely a small place.

Cost of Living

Dubai: A comfortable lifestyle for a single founder costs $3,000–6,000/month depending on accommodation and area. Premium areas like Downtown or Marina are significantly more expensive.

Andorra: Generally 20–30% cheaper than Dubai. Rent for a modern apartment in Andorra la Vella runs EUR 1,000–2,000/month. Groceries and dining are similar to Spanish prices. Total monthly costs for a comfortable lifestyle: EUR 2,500–4,000.