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Companies and Structures in Andorra

When we hear about Andorra, the first thing that comes to our minds is its famous characteristic of being a country with a beneficial tax system for individuals as well as companies. However, beyond this condition, Andorra offers one of the best environments in the world for the creation or operation of companies within its territory.

One of the examples can be the little and transparent bureaucracy, the digital infrastructure, the geographical location and evidently the quality of life. These are necessary conditions to bring to change the creation of a company within the small country and that allow the creation of value in an effective and legal way of the company that you want to open.

How to Create a Company in Andorra?

The creation of a company in the principality consists of three steps. However, before mentioning them, we must know the type of company we would like to create. In Mundo Experts we expose the different steps to follow and the different possible types of companies that exist.

Public Limited Company (SA)

This is a type of company that works for the creation of a large company, since its capital is divided among a large number of shareholders that make up the company. The minimum capital to create a corporation is €60,000 and its registration and registration fee is €850.

In the event that a single person wants to opt for this type of structure for his company, then he must create a Sociedad Anónima Unipersonal (SAU).

Limited Company (SL)

This type of structure is recommended for smaller companies, mainly for the commerce or services sectors (one of the largest in the Andorran economy due to the tourist activity). If only one person opts for this type of company, then we speak of SLU (Sociedad Limitada Unipersonal).

The minimum capital required for the creation of the Limited Company is 3,000 euros.

General Partnership

It is an unlimited liability company in which the capital is divided among the partners: the conditions of this statute is a union or integration of the corporation and the limited liability company.

Requirements for the Creation of a Company

1. To request the corporate name. This procedure is carried out before the Government of Andorra. In it we will request the name that will have our society to create, and the request of the foreign investment is also made. This procedure is carried out as in any other European country. The government facilitates a form to validate the social denomination and thus to obtain a first successful procedure.

2. Application for foreign investment. This application is made to the Andorran government when the client or clients hold more than 10% of the share capital for the company. It is not necessary for residents. However, it is mandatory if you are a foreigner. In addition to this, a criminal record must be submitted, to prevent any history related to illicit activities.

3. Bank account and capital stock. After compliance and KYC, a bank account of a company in incorporation must be opened and the share capital must be deposited in it. This requirement is similar to that of any other country, it is a matter of creating a bank account of a company in incorporation and making the actual deposit of the capital. For such procedure we must go to any of the five banking entities in the country, complying with the bank compliance requirements of each entity. Of course, when contacting Mundo Experts you will be assisted by our experts in this type of procedures.

It is necessary to note that the compliance procedure may also be conditioned by the type of company that is being opened, as well as the condition of the partner or partners.

4. Public deed and signature before a notary. Execution of the public deed and the articles of association of the company and the incorporation process before a notary. After the signature before the notary, the notary has 20 days to register the company after the signature and incorporation in the Andorran commercial register.

5. Inscription in the Register of Companies. The notary has 20 working days to register the company after signing and incorporation in the Andorran commercial register. Once signed, the notary registers the public deed and incorporates it in the Register of Companies, thus empowering the company. However, this does not mean the empowerment of the company, since the commercial authorization is still required (a process of approximately one month).

6. Deposit in the AFA. We will deposit a total amount of €15,000 as a deposit with the corresponding organization and thus obtain the residence permit on our own account. While all the company procedures are being carried out and in order to move forward with the self-employed residence permit, the deposit of the deposit of 15.000€ is made in the Andorran Financial Authority, which will be returned in full after the processing of the cancellation of the permit itself.

7. NRT and Registry of Commerce and Industry. This procedure and its approval, will allow us to exercise the commercial activity, and we obtain the NRT. All companies that exercise an activity, industrial or of services have to be registered in the registry of commerce. For this moment you must have the address of your company secure and specified.

8. Inscription in the CASS and other formalities. Finally, we register the company (and members) in the Andorran social security and carry out specific procedures for each company. Finally we would have to register in the Social Security (CASS) the administrators and also their employees if applicable and request some digital files that are very useful for various management tasks in the company. Other formalities are also carried out if required.

The Advantages of Setting Up a Company in Andorra

Labor costs

One of the first advantages to highlight is the lower labor costs compared to countries like Germany or France. The social security charge for companies is 15.5%, while the same charge exceeds 32% in Spain and France. This fact facilitates the hiring of employees and reduces the fixed cost of any entrepreneur setting up a business in Andorra.

Salaries in Andorra

Salaries also offer very competitive figures. The average salary in Andorra is around 2,100 €/month and the minimum salary is 1,083.33 €/month. The latest data extracted from the INE, show how the average salary in Spain is close to the Andorran one, although if we add the difference of the labor cost for the Social Security, it increases up to 12% more than Andorra.

Infrastructures of Andorra

Andorra's infrastructures are frankly enviable. Communication routes are in full process of improvement, while the country offers 100% fiber optic coverage throughout the territory, while the average coverage in the EU is only 44%. It can be a very attractive destination also for e-commerce YouTubers and remote sales companies from Andorra.

Health System

With a highly qualified medical team and with coverage in other countries thanks to extraterritorial agreements. Likewise, its educational system offers three different models of high quality and free of charge, as well as other options for private and specialized education.

Real estate rental

The cost of renting real estate that can serve as a small office is very economical compared to countries such as France or Spain. The value is around 250€ in a coworking space, a truly affordable price to locate your business office in Andorra and make the most of all the advantages it offers. In addition, municipal charges in the country only amount to less than €800 per year, making it easier to boost the profits of companies established in the Principality.

Substance

When we talk about substance we mainly refer to having a structure in the country, which leads to operating costs for your company. Issues such as salaries and office rents are extremely competitive in Andorra if you compare them with other low tax jurisdictions such as Switzerland, Malta, Ireland or Cyprus.

The minimum salary in Andorra is around €1,120 and office rent is around the minimum cost of only €400 per month. Also, comply with local substance requirements for company models with a special 2% reduction in corporate tax.

If you require qualified personnel, keep in mind that the majority of the population is trilingual and has university education from France and Spain.

Finally, costs related to accounting and auditing, electricity and annual maintenance expenses for your Andorran company are very competitive and at a much lower price level than those of neighboring Spain or France.

On the other hand, substance is the future while offshore companies are slowly disappearing. Obviously the substance comes at a price and has to fit with your business model to work. Andorra may be the best option if you compare it with other jurisdictions within the same European continent. It is necessary to remember that it is not only the country with the lowest corporate tax in the region, but it also has really low structural costs.