Opening a business in Andorra
Why open a company in Andorra?
Tax advantages of doing business in Andorra
- 10% of Impost de Societats (Corporate tax), with the possibility of having a bonus of 80% (rate of 2%)
- Some holdings exempt from paying corporation tax (see services)
- Social contributions for employees of 15.5%
- VAT, called IGI, 4.5% only
- Annual rates and costs to maintain the company below € 800 for current companies
Process to create the company
- Local of at least 20m2
- Electrical installation
- Fire extinguisher installation and maintenance
- Criminal record and valid passport
- Business plan and investment strategy
- (*) For the business plan and strategy we provide all the necessary help for compliance
Requirements to maintain the business and substance
- Registered office in Andorra
- Administrator or resident employee.
- Prepare quarterly and annual tax returns
- Pay municipal taxes (€ 800 per year approx.)
- Actual activity with operations and transactions
- At least one physical office (or local) employee
- Manage operations and decisions from Andorra
- Commercial premises: office, home, offices, etc. (from € 400 per month approx.)
Substance factor in international business
- Physical and registered office (not just postal address)
- Administrative meetings within the Principality
- Principal active bank account in Andorra
- Accounting and accounts management in the country
- Usual operating expenses in Andorra
What is this about economic substance?
In 2013, the Organization for Economic Cooperation and Development (OECD) sought to combat tax avoidance practices at the international level. Specifically reduce if not eliminate the Base Erosion and Profit Shifting or BEPS for its acronym in English. With this term it designates the tax planning strategies used by multinational companies to take advantage of discrepancies, gaps, unwanted mechanisms and inconsistencies in national tax systems and transfer their benefits to countries with little or no taxation.
For this they launched the bEPS project at the international level and a report with 15 actions to be taken to combat this problem, seeking to reduce tax fraud. As well, one of the measures of this project it is precisely "improving the coherence of international tax standards, reinforcing its focus on economic substance and guaranteeing a more transparent fiscal environment", thus making the concept of substance a requirement to operate an international business.
Approximate times and costs
Costs and administrative fees: € 2,000-2,500 approx.
Agency fees: from approx. € 4,000, on request.
Estimated time: between 2 and 3 months