Starting a Business in Andorra: Benefits and Requirements Updated for 2024

Opening a business in Andorra It is certainly an option to consider, especially for Spaniards, French or Portuguese due to the geographical proximityHowever, starting a business in another country is a serious project that requires planning.

What do you need to start a business in Andorra? Below, we detail the requirements and procedures you'll need to complete, along with a step-by-step guide to completing the process.

Why Open a Business in Andorra?

Low taxation: In Andorra, the maximum total taxes generally do not exceed 10% of income, regardless of its source.
LocationLocated in the Pyrenees between France and Spain, Andorra is close to Barcelona and Toulouse, providing easy access to all of Europe.
CovenantsAndorra has bilateral agreements, including more than 13 double taxation agreements (DTAs), with various countries around the world.
Low quotes: Competent social security system and one of the best healthcare systems in the world.

Tax Advantages of Starting a Business in Andorra

Impost de Societats (Corporate tax): 10%, with 80% bonus available (effective rate of 2%).
Social Security Contributions: 15.5% for employees.
VAT (IGI): 4.5% only.
Personal income tax: between 0% up to €24,000 and 10% starting at €40,000
Holdings: Some are exempt from corporate tax.
Annual Costs: Less than €1,000 for regular businesses.
Entrepreneurial climate: In Andorra, an entrepreneurial climate conducive to digital businesses has developed.

Types of Companies in Andorra

Limited Liability Company (SL)

Minimum share capital: 3.000€
Ideal for: small and medium-sized enterprises

Public Limited Company (SA)

Minimum share capital: 60.000€
Ideal for: Large platforms and companies

Process for Forming a Company

Company Name Application: Request the name of the company from the Government of Andorra.
Foreign Investment Application: Required if clients hold more than 10% of the share capital.
Bank Account and Share Capital: Open a bank account in a Andorran bank and deposit the share capital.
Public Deed and Signature Before a Notary: Drafting of the public deed and signing before a notary.
Registration in the Registry of Companies: The notary will register the company within 20 days.
Deposit in the AFA: Deposit €50,000 to obtain a self-employed residence permit.
NRT and Registry of Commerce and Industry: Apply for the opening of the business and obtain the NRT.
Registration at CASS: Register the company and its members with Andorran social security.

Applying for the companies corporate name is similar to any other European country. The Government of Andorra provides a form to validate it and thus obtain a successful first request. We can use it below:

Requirements for Starting and Maintaining a Business

Registered Office in Andorra
Administrator or Employee Andorran Resident
Quarterly and Annual Tax Returns
Municipal Taxes (€800 per year)
Real Activity with Operations and Transactions
Physical Office (business address) in Andorra
Operations Management from Andorra
Commercial premises with fire extinguisher contract and electrical certificate

Substance factors in international business

Registered Physical Office
Administrative Meetings in Andorra
Main Bank Account in Andorra
Accounting and Locally Managed Accounts
Operating Expenses in Andorra

Required documentation

Identity document (ID, passport, etc.) original and notarized copy with the Hague apostille
Clean criminal record and with The Hague Apostille, from all countries of birth, nationality and residence
Business plan and investment strategy

Approximate time and cost

Incorporation costs

Government and notary fees: ~2.000€
Dispatch fees: ~4.500€

Annual maintenance costs

Municipal taxes: ~800€
Accounting Management Fees: ~2.500€

Estimated Time of Constitution

Total duration: approximately 3-4 months

Company in Andorra and operate in Spain

It is possible to create a company in Andorra and live in Spain, although this involves additional costs and meeting economic substance requirements in Andorra. This means having at least one hired employee who is an Andorran resident and an employed worker.

Tax Comparison: Andorra and Spain

Individual Income Tax (Personal Income Tax)

- Andorra:
  - From €0 to €24,000: 0%
  - From €24,001 to €40,000: 5%
  - More than €40,000: 10%

Spain (2024):
- From €0 to €12,450: 19%
- From €12,450 to €20,199: 24%
- From €20,200 to €35,199: 30%
- From €35,200 to €59,999: 37%
- From €60,000 to €299,999: 45%
- More than €300,000: 47%

Corporate Tax (IS)

Andorra: 10%
Spain: 25%

VAT (IGI in Andorra)

Andorra:
- General: 4.5%
- Special: 2.5%
- Reduced: 1%
- Super Reduced: 0%
- Increased: 9.5%
Spain:
- General: 21%
- Reduced: 10%
- Super Reduced: 4%

Is it better to live in Andorra?

Advantages of Living in Andorra

- Quality of Life: Clean air, low noise pollution and clean water.
- Health System: One of the best in the world.
- Quality Public Education: Three public systems available (Andorran, Spanish and French).
- Tranquility and Security: Crime rate practically zero

Requirements to Reside in Andorra

- Reside 183 days in Andorra
- Foreign Investment Authorization
- Deposit of €50,000 in the AFA
- Hold an administrative position in the company

Do you want to start a business in Andorra?

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Frequent questions

❓ How much does it cost in money and time to set up a company in Andorra?

Although of course it depends on the specific business, opening a company in Andorra usually costs around €4,500 in fees + €2,000 in taxes and costs, to which must be added the share capital and the deposit to be deposited in the AFA for the residence.

❓ Can I have a company in andorra and live in spain?

It is totally viable and legal. The company would pay taxes in Andorra, and the businessman would be subject to Spanish regulations by maintaining his tax residence in Spain, without benefiting from the Andorran tax advantages.

❓ How much does a company pay in Andorra?

In general, 10% on net benefits and approximately <€ 1,000 per year for maintenance. Dividends extracted are also exempt from Andorran personal income tax.

❓ What requirements are there for international business?

In general, demonstrate that the main activity is carried out: main bank account, accounting management, administrative meetings, registered offices, etc.