Creating a company in Andorra: everything you need to know
Creating a company or a business in Andorra brings many advantages, especially considering the country’s tax system. Below, Molines Patrimonis helps you discover the types of companies you can create, the steps to follow, the necessary documents and the multiple advantages for your future company in the Principality.
How to create your company in Andorra? The necessary procedures to set up your own business
There are different steps to follow, three specifically, to create a company or a business in the Principality, but first you must choose the type of company you want. Molines Patrimonis shows you the different steps to follow and the possible types of company.
Type of company
We highlight three types of companies or companies that can be created in Andorra.
Public limited company (SA)
A SA is ideal for the creation of a large company since the company’s capital is divided between a large number of shareholders. The minimum capital required to form a public limited company is €60,000 and the registration and enrollment fee is €850.
If a single person chooses this type of structure for their company, then we will be talking about a Single-Personal Limited Liability Company (SAU).
Limited company (SL)
This type of structure, comparable to the Spanish S.L, is recommended for smaller companies, mainly in the trade or service sectors. If a single person opts for this formula, then we are talking about an SLU (Societat Limitada Unipersonal).
To create this type of company, you must invest a minimum capital of €3,000.
Collective society
It is an unlimited liability company in which the capital is divided between the partners: the conditions of its statutes are inspired by the SA and the SL.
Steps to follow to create your company in Andorra
We will then provide you with information about the necessary documents and the steps to follow to create your company in Andorra.
Documents needed to set up your new company in Andorra
To create a company or a company in the Principality of Andorra you will need to provide the documents detailed below. Some of the requested documents will need to have the Hague apostille (valid for 3 months). We advise you to contact an Andorran lawyer for more information.
- The criminal record certificate, duly apostilled, of each of the partners.
- The passport (valid) and the residence certificate, apostille, of all partners.
- A business plan describing the investment strategy and mentioning the provisional budget and analysis of financial results.
- The draft of the company’s statutes.
- The company’s corporate name reservation.
- Proof of the opening of a bank account in the name of the company in an Andorran bank, and of having deposited the share capital in said account.
The 3 steps to follow to create your company in the Principality
In order to attract international investors, the Government of Andorra facilitates the conditions for creating companies in Andorra. Generally, the period for creating a company in Andorra is 60 days, during which all the procedures are carried out and the Andorran authorities assess the interest of the project. We advise you to contact jurists or lawyers specialized in the constitution of companies, since the official language of the country is Catalan and all the documentation is written in this language.
For companies in which more than 10% of the capital is held by a non-resident, prior authorization for foreign investment must be requested. A response is usually obtained within a maximum period of forty-five days. Once the investment authorization has been obtained, the application for “reserve of social name” must be submitted, with the name of the future company which must be in Catalan, cannot be a generic name and must clearly define the company’s activity, and the application for incorporation which must include the company’s corporate purpose, the address of its headquarters and the list of members of the company’s board of directors. Finally, a public deed of incorporation must be granted before a notary that will allow its registration in the Commercial Register of the Government of Andorra. It is from this moment that the company will have legal personality.
Advantages of creating your company in the Principality
A favorable tax system for setting up a business in the Pyrenean paradise
Andorran taxes and fees are among the lowest on the European continent, which makes the country an attractive place for many foreign investors.
Corporate tax (IS)
When creating a company, it is necessary to take into account the tax rate that will be levied on its profits. In Andorra this tax is 10%. In addition, during the first 3 years of activity, reductions can be applied depending on various parameters.
Personal income tax (IRPF)
Personal income tax, as its name suggests, taxes the income of all individuals residing in Andorra. Individuals residing in Andorra for more than 183 days a year are considered tax residents in the country. The tax rate is 10%, and individuals who earn less than €24,000 per year in income from work are exempt from paying this tax. For those who earn between €24,000 and €40,000 per year, also from income from work or economic activities, the tax rate is 5%. Capital income, although it must be included in the personal income tax return, is treated differently and is taxed at a rate of 10% from €3,000 per year.
General Indirect Tax (IGI) and other taxes
The IGI is the equivalent of the Spanish VAT. The general rate is 4.5% and is levied on the provision of services or the purchase of goods. Companies that export goods or services are not subject to this tax, provided that the final beneficiary of the goods or services is a company not resident in the Principality.
There are other taxes and fees in the Principality that may have an impact on companies:
- Consumption tax: customs tax that is levied mostly on agricultural products imported into Andorra
- Tax on the registration of owners of economic activities: varies between €200 and €800 per year
- Location tax for commercial, business and professional activities: depending on the nature of the activity, the location and the surface area of the company.
Social charges for companies in Andorra
There is a single public social contribution fund in the Principality: the CASS (Caixa Andorrana de Seguretat Social) which covers all branches: illness, old age, family benefits, etc. The contribution percentage is approximately 20% of the salary received by the worker (5% paid by the worker and 15% paid by the employer). The CASS reimburses up to 75% of all medical expenses for residents in Andorra.
Advantages for entrepreneurs who want to create their company in the Principality
If you want to set up your company or business in the Principality, once you have registered in the commercial register, you have the right to request the status of active tax resident in Andorra. The Andorran authorities will recognise this status approximately 15 days after you have undergone a medical examination at the immigration service. In addition, the cost of labour in the Principality is considerably lower than the average applicable to the European continent, such as, for example, France or Spain. The social charges that companies must contribute to CASS, the Social Security of Andorra, are 15%, while, for example, in the two neighbouring countries, the social charges represent at least 30%. Hiring is, in fact, easier in the Principality and the labour market is more fluid.
