Create a company in Andorra: advantages and requirements
Why open a business 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 incorporate a company
1. Application for company name
Applying for the companies corporate name is similar to any other European country. The Government of Andorra provides a form to validate the company name and thus obtain a successful first request. Then we can use it:
2. Foreign Investment File
This step is not necessary if you are a resident. As normally before creating the company the client is not a resident, we must request the Government to allow us to invest as foreigners. For this, a certificate of criminal record is required, for the prevention of money laundering.
3. Bank account and share capital
The following of the basic requirements as in any other country, is create a bank account of a company in constitution and make the effective deposit of capital. For this we will have to go to any of the five banks in the country, also complying with the requirements of banking compliance of each entity. Of course, they have the help of our professionals, already experienced in this kind of documentation.
It is worth mentioning that the compliance process depends exclusively on the bank in question, and will vary depending on the type of company and its activity, as well as the current condition of the partner or partners.
4. Public deed and signature before a notary
Prior to the incorporation before a notary, the drafting of the public deed and statutes of the company, which will vary according to the characteristics of the same. Once the deed has been drawn up and with the company name and the certificate of deposit of the capital stock, you can proceed to the previous step to have the company open: go to the notary.
5. Registration in the Companies Registry
Once signed, the notary registers the public deed and incorporates it into the Companies Registry within a maximum period of 20 days, thus empowering the company. However, this does not imply the authorization of the same, since the commercial authorization is still required (process of approximately one month).
6. Deposit in the AFA
While all the procedures of the company are carried out and to advance with the self-employment residence permit, the deposit of the deposit of € 15,000 in the Andorran Financial Authority, which will be returned in full after the cancellation of the same permit has been processed.
7. NRT and Registry of Commerce and Industry
I know request the opening of the company's trade. All companies that carry out an industrial or service activity must be registered in the trade registry. By this time you must have the address of your company safe and specified.
8. Registration in the CASS and other procedures
Finally we would have to register with Social Security (CASS) to the administrators and also to their employees if it applies and request some digital files that are very useful for various management tasks in the company. Other procedures are also carried out if required.
- 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 the 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
Update to 2021
As an update for 2021, we can highlight that, despite the world situation current due to the pandemic, the Principality continues to operate normally when it comes to processing the business transfer to Andorra and attracting new residents, in such a way that the time required to carry out the entire process remains approximately the same: between two and three months.