Andorra, with its attractive tax framework, has become a magnet for entrepreneurs looking for a favorable business environment. This small country in the Pyrenees offers a maximum corporate tax rate of 10%, which makes it particularly tempting for the creation of companies and holding companies. Here at MCA Assessors, we explain how to set up a company in Andorra.
What are the advantages of setting up a company in Andorra?
Setting up a company in Andorra offers several advantages compared to other European countries.
- Reduced corporate tax: With a maximum tax rate of 10%, Andorra is positioned as one of the countries with the lowest tax burden in Europe, attracting entrepreneurs seeking to maximize their profits.
- Facilities for foreign investors: The Foreign Investment Law allows non-residents to invest in Andorra, facilitating the establishment of international businesses.
- Accounting regulations similar to neighboring countries: Accounting laws in Andorra are very similar to those of neighboring countries, which facilitates adaptation.
- Low operating costs: Both the incorporation and maintenance costs of a company in Andorra are lower compared to other destinations such as Malta, Luxembourg, or Cyprus.
These are the steps to set up a company in Andorra:
Setting up a company in Andorra requires following a detailed process that can take from two to four months. These are the main steps you need to take into account:
Reservation of the company name
The first step is to propose three names for the company to the Andorran government in order of preference. The answer on the availability of the name is obtained in approximately 10 days.
Application for foreign investment
For non-residents wishing to acquire more than 10% of a company, it is necessary to file a foreign investment application. This process can take two to three months and requires a complete dossier.
Opening a bank account
Opening a bank account to deposit the share capital is one of the most complex steps since banks require a detailed explanation of the origin of the funds and the activity of the company. That is why it is best to have the help of a team of professional advisors.
Incorporation and registration of the company
Once the banking formalities have been completed, the company statutes are formalized before an Andorran notary. Subsequently, the company is registered in the country’s commercial register.
Obtaining the trade license
In order to start operating and invoicing, a trade license must be obtained from the corresponding Andorran Comú (town hall). Currently, this procedure can be expensive due to the high demand in the Andorran Comús.
Tax registration and Social Security
Finally, the tax registration number is obtained and the company is registered with the Andorran Social Security, thus completing the incorporation process.
This is the documentation you need:
Setting up a company in Andorra requires a number of documents to be gathered due to the strict controls to prevent money laundering.
- Criminal record: Legalized with the Apostille of The Hague with a maximum validity of three months.
- Copy of passport: Legalized with the Apostille of The Hague or by an Andorran notary.
- Professional and business documentation: Including CV and business plan.
- Proof of tax compliance: Previous tax returns and documents proving the origin of funds, such as accounting and annual accounts.
Who should consider setting up a company in Andorra?
Andorra is especially attractive for professionals with activities that are not geographically limited such as influencers, YouTubers, athletes, consultants, digital marketing experts, programmers, professional gamblers, lawyers, investors, and crypto-investors. For these profiles, setting up a company is essential to obtain active residency, invoice, and benefit from the country’s tax conditions.
Is it possible to set up a company in Andorra without residency?
It is possible to set up a company in Andorra without residing in the country. However, it is crucial to take into account the effective address and the economic substance (location of the office, employees, etc.) to determine the tax residence of the company.
The tax administration of the home country may consider the company to be resident in that country if it can be shown that the effective management is carried out there. For example, if the tax administration in Spain proves that a company incorporated in Andorra is managed from Spain, the company will have to pay Spanish corporate income tax. It is therefore vital to ensure that the company has a real economic presence in Andorra in order to fully benefit from the Principality’s tax advantages.
In conclusion, setting up a company in Andorra is a smart move for many professionals who wish to optimize their tax situation. However, it is advisable to do it in the hands of professionals to avoid confusion and possible mistakes. At MCA Assessors, we have a team of expert advisors who will guarantee a smooth and controlled process.
