Creating a company in Andorra is becoming a very attractive option for entrepreneurs and investors thanks to its tax advantages, economic stability, and business-friendly legislation. In this article, we explore the necessary steps to establish a company in the Principality, the associated costs, and the tax benefits that companies setting up in Andorra can enjoy.
Why is Andorra attractive to entrepreneurs?
Andorra has established itself as a privileged destination for international business for several reasons:
- Low taxes: The corporate tax rate is 10%, one of the lowest in Europe.
- Quality of life: Safety, natural landscapes, and a high standard of living make Andorra a desired destination for professionals and businesspeople.
- Access to the European market: Although not a member of the European Union, Andorra has agreements that facilitate trade and economic relations with the EU.
- Infrastructure and technology: Andorra boasts advanced infrastructure and good technological connections, making it a hub of innovation in sectors such as digital commerce, fintech, and tourism.
Steps to create a company in Andorra
- Obtaining foreign investment permission: Foreign entrepreneurs must apply for a foreign investment permit, which allows owning more than 10% of the capital of an Andorran company. This procedure is carried out before the Government of Andorra and usually takes between 2 and 4 weeks.
- Approval of the company name: Once the permit is obtained, the company name must be reserved in the Companies Registry. It is essential to ensure that the chosen name is not previously registered. This process takes about 5 business days.
- Incorporation of the company before a notary: With the approved name, the incorporation of the company is formalized before a notary, which includes the contribution of the minimum share capital, which is €3,000 for a limited liability company (SL) and €60,000 for a public limited company (SA).
- Company registration: After signing before a notary, the company must be registered in the Companies Registry of Andorra and obtain the NIF (Tax Identification Number). This process can take between 10 and 15 days.
- Obtaining activity licenses: Before beginning operations, the company needs to obtain the necessary business licenses, which are requested at the town hall of the municipality where the company’s headquarters will be located.
Costs associated with creating a company in Andorra
The initial costs for establishing a company in Andorra can vary depending on the type of company and economic activity. Some of the main costs include:
- Share capital: €3,000 for an SL (Limited Liability Company) and €60,000 for an SA (Public Limited Company).
- Notarial fees and registrations: Approximately between €1,200 and €1,500, depending on the complexity of the operation.
- Business licenses: Costs vary depending on the activity and location, but typically range from €500 to €1,500.
Tax benefits for companies in Andorra
- Reduced corporate tax: The corporate tax rate in Andorra is 10%, much lower than in most European countries.
- Non-resident income tax: Non-residents are taxed only 10% on income generated in Andorra, and the personal income tax (IRPF) is capped at 10%.
- General Indirect Tax (IGI): The IGI, equivalent to VAT in other countries, has a general rate of 4.5%, much lower than the European average. Discover all the details in this article.
- Other tax incentives: Andorra has various double taxation agreements with countries such as Spain, France, and Portugal, which prevent residents from paying taxes twice.
Creating a company in Andorra offers numerous benefits for both entrepreneurs and investors. With a favorable tax environment, a strategic location, and modern infrastructure, Andorra is an ideal place to establish or expand a business. If you are thinking of starting your activity in Andorra, the WIT team can help you manage all the legal, tax, and administrative procedures to ensure your business gets off to a good start.
Contact us today and start your business project in Andorra with the expert advice of WIT.
