Thinking about starting a company in Andorra? This article will guide you through the tax advantages, legal requirements, and essential steps to set up your business in this appealing European destination.
Jun 25, 2025
Starting a business in Andorra is a fantastic opportunity for entrepreneurs seeking to establish their venture in a country with favorable taxation and a stable economic environment. Andorra has become an attractive destination because of its low tax rates, strategic location between Spain and France, and easy access to international markets. Both public limited companies and private limited companies are the most common legal forms for setting up a business in Andorra, each catering to different business profiles and needs.
The process of starting a business in Andorra involves meeting specific requirements and procedures, such as applying for foreign investment and obtaining the necessary authorization. These steps ensure transparency and legal security, facilitating foreign investment and the development of new businesses in the country. Understanding these requirements is crucial to fully benefit from what Andorra offers when establishing a business and ensuring the success of the project.
Andorra provides an attractive business environment due to its low tax burden, with a maximum corporate tax rate of 10% and tax exemptions on dividends.
There are two types of companies in Andorra: Public Limited Company (SA) with a minimum capital of 60,000 euros and Private Limited Company (SL) with a minimum capital of 3,000 euros, each suited to different business needs.
The process of setting up a business in Andorra can take between 2 to 4 months and requires compliance with various legal and tax requirements, including obtaining a residence permit for entrepreneurs.
Andorra offers one of the lowest tax burdens in Europe, with a maximum corporate tax rate of 10%. This low tax rate is a significant draw for entrepreneurs looking to maximize their profits. Additionally, companies in Andorra can benefit from tax exemptions on dividends and certain capital gains, allowing for much more efficient tax planning.
The economic environment in Andorra is stable and has shown sustained growth, creating a favorable climate for entrepreneurs. Furthermore, Andorra’s strategic location between France and Spain facilitates international trade, making it an ideal point for fulfillment and dropshipping businesses. The quality of life in Andorra is another important attraction, with stunning natural surroundings and excellent sports facilities, such as ski resorts, contributing to a balanced lifestyle. Andorra stands out in the world for its competitive and regulated tax environment, positioning itself as one of the most attractive jurisdictions compared to other countries in the international business and tax context.
The low social security rates in Andorra offer several advantages:
They are on average 15% lower than those in other European countries.
They reduce costs for companies.
They improve employee well-being.
Andorra is an ideal destination for both SMEs and large companies.
It offers a safe and regulated business environment that facilitates growth and expansion.
Finally, Andorra is extremely appealing to investors due to its significant tax advantages. The transparency and low tax burden allow for profit optimization and lower personal income taxes, consolidating Andorra’s position as a modern and regulated tax haven.
In Andorra, there are two main types of companies that can be established: the Public Limited Company (SA) and the Private Limited Company (SL). Each of these models allows great flexibility for foreign capital participation and is designed to accommodate different business needs and entities.
All companies in Andorra must have their tax domicile in the Principality of Andorra and appoint at least one manager. It is essential that the partner or manager has the capacity to make strategic and operational decisions, as executive and management decision-making is key for the company to meet the legal and tax requirements demanded in Andorra. The Articles of Association of each company must contain essential information. This includes the legal form, company name, corporate purpose, and share capital.
Next, we will explore in detail the characteristics of each type of company and how to create a company for different individuals.
The Public Limited Company (SA) is an ideal option for businesses that require significant capital, as the minimum required to establish an SA in Andorra is 60,000 euros. This type of company can be single-shareholder, known as SAU, which allows one person to establish it.
Moreover, foreign citizens can own up to 100% of an Andorran company, provided they meet the capital requirements and obtain government approval. This makes the SA an attractive option for those looking to establish a significant presence in Andorra.
The Private Limited Company (SL) is commonly chosen by small businesses due to its lower required minimum capital, which is 3,000 euros. This type of company is ideal for entrepreneurs seeking a simpler and less costly structure to start their business.
One of the main advantages of the SL is that the liability of the partners is limited to the capital contributed to the company, protecting the personal assets of the partners in case of debts or financial issues. This feature makes it a safe and flexible option for many businesspeople.
Andorra also has holding companies, which are equivalent to asset management companies. These companies are often established as Private Limited Companies (SL) and are characterized by not having registered commercial activity. Their main function is the management and administration of investments in other companies, facilitating asset and tax planning.
Holding companies in Andorra benefit from the country's tax advantages, including a reduced tax burden and the absence of wealth taxes, making them an attractive option for asset management and business structuring.
Share capital is a key element in the formation of any company in Andorra, as it determines the financial base on which the company is established. Depending on whether a private limited or public limited company is chosen, the required minimum share capital varies, allowing entrepreneurs to choose the structure that best suits their needs and investment possibilities. This capital must be deposited in a bank account in the name of the company before its registration, thus ensuring the initial solvency of the business.
Regarding financing, Andorra offers various alternatives both for the initial contribution and for the future development of the company. Entrepreneurs can turn to local or international financial institutions to obtain lines of credit, loans, or even seek private investors interested in participating in the company's growth in Andorra. Proper financial planning from the start is essential to guarantee the viability and success of the company, allowing it to face market challenges and seize expansion opportunities in the country.
Creating a company in Andorra involves several essential steps, from depositing capital to registering with the appropriate registry. It's crucial to have good advice to avoid issues with the tax administration and ensure compliance with all legal requirements. During the process of creating the company, it's necessary to complete several forms for the application of company name, foreign investment, and tax registration.
The formalization of incorporation requires executing a public deed before a notary, where the articles of association are drawn, and the company is registered in the Companies Registry. Once constituted, a Tax Registration Number (NRT) must be obtained to start operations.
Commercial registration is also necessary to begin invoicing with the company. Below, we detail the specific steps involved in this process.
The first step in establishing a company in Andorra is to apply for the company name. This process involves proposing up to three names for the company name, ordered by preference. The application for the company name takes approximately 10 days to be confirmed by the government.
In addition, it is necessary to obtain an Administrative Identification Number (NIA), which can be completed in approximately two days. This number is essential to proceed with the next steps in creating the company.
Non-residents wishing to invest in Andorra must meet the following requirements:
Hold a minimum 10% stake in the company.
Apply for an Andorran Identification Number in advance.
Provide criminal records from the interested party's country of residence.
The foreign investment application process can extend up to a month and 15 days. Foreign investment authorization allows non-residents to invest in Andorran companies, thus facilitating the entry of foreign capital.
One of the main challenges of opening a bank account in Andorra is meeting the bank’s compliance requirements. Opening a bank account involves describing the company's activity and justifying the source of funds. Approval to open a bank account in Andorra takes approximately one week.
The process to have a pre-approved bank account can vary between 1 and 4 weeks. Once the bank approves the activity, the next step is to deposit the share capital in the company's bank account.
To formalize a company in Andorra, a series of important documents must be submitted, including:
A criminal record certificate, apostilled according to the Hague Convention.
A copy of the passport, certified by a notary in Andorra.
A resume in Spanish or Catalan.
A brief business plan describing the activity.
If the person is already a resident in Andorra, a copy of the green card or Andorran passport is sufficient.
Additionally, the following must be provided:
The deed of incorporation and the powers of attorney for the representatives, both apostilled or legalized.
A certificate from the Commercial Registry.
The Articles of Association.
The Act of real ownership.
At Papers, we create companies starting at 3,000 euros. These costs do not include the capital deposit, registration expenses, or notarial fees. Papers is among the most competitive players in the sector, offering efficient and high-quality service for the incorporation of companies in Andorra. Additionally, it allows you to create the company directly online and access a comprehensive control panel for tracking and managing your company easily and centrally.
The process of creating a company in Andorra can take between two and four months. The formalization of the company registration is completed within a maximum of three weeks after the signing of the notarial deed.
The registration of the company in the Companies Registry in Andorra takes a maximum of 20 days. The slowest procedures usually include bank compliance. Additionally, opening a business is characterized as a slow process as well. In general, it takes between 7 to 15 weeks to activate a company in Andorra.
The active residence permit is an essential requirement for businesspeople who wish to reside in Andorra and is valid for one year, renewable every two, five, and then every ten years. To obtain this residence, a deposit of 50,000 euros must be paid, and the applicant must have no criminal record.
To maintain residency status in Andorra, it is mandatory to:
Reside in Andorra for at least 183 days a year.
Have at least 20% participation in a local company.
Hold an administrative position in the company.
It's possible to move a company to Andorra, although the usual process involves dissolving the company in the original country and creating a new one in Andorra. You can also buy an existing company in Andorra, but it is advisable to check for any outstanding debts of the company before proceeding.
Andorra offers more advantages for setting up a new company than simply moving an existing one. The change of partner and company name when purchasing an existing company in Andorra must be submitted to a notary.
Economic substance refers to the effective management and location of the office and workers of an establishment. It is a key term to avoid tax evasion and ensure that a company’s commercial operations align with its tax location. Moreover, economic substance protects the company's tax base from erosion and tax evasion, aligning with international initiatives that aim to safeguard taxable income.
To meet the economic substance requirements in Andorra, there must be at least one resident Andorran employee, and the physical space requirements must be met. These measures ensure compliance with tax and social security regulations.
Andorra has double taxation treaties with several countries, which help avoid double taxation for companies. These treaties facilitate tax optimization and international tax planning.
The country offers the following tax advantages:
No wealth, inheritance, or gift taxes, facilitating wealth planning.
The corporate tax rate has a maximum tax burden of 10%.
Companies with economic substance can benefit from tax treaties.
The income tax in Andorra is one of the main attractions for those seeking to create a business in the country. With a corporate tax that does not exceed 10%, Andorra is positioned as one of the most competitive destinations in Europe in terms of taxes. This low tax burden allows companies to maximize their profits and reinvest in their growth, which is particularly interesting for entrepreneurs and companies looking to optimize their taxation.
Additionally, Andorra has signed double taxation treaties with several countries, facilitating international activities and preventing income from being taxed twice. For those who obtain residency in Andorra, there are also additional tax benefits, provided the established legal requirements are met. Therefore, it is recommended to seek advice from experts in Andorran taxation to make the most of the country’s tax advantages and ensure compliance with all tax obligations, both for the company and for its partners and managers.
Creating a company in Andorra offers a unique combination of tax advantages, quality of life, and a stable economic environment. From low tax rates to tax exemptions and strategic location, Andorra presents itself as an ideal destination for entrepreneurs and businesspeople.
In summary, Andorra not only provides a favorable environment for businesses but also guarantees a high quality of life. If you are considering setting up a business in Andorra, the benefits far outweigh the challenges, making this small country an excellent choice for your next business venture.
The corporate tax in Andorra is 10%, making it one of the most competitive rates in Europe.
Establishing a company in Andorra usually takes between two to four months, depending on the necessary administrative procedures. It is crucial to prepare all documents in advance to speed up the process.
In Andorra, you can incorporate mainly two types of companies: Public Limited Company (SA) and Private Limited Company (SL). This structure allows entrepreneurs to choose the form that best suits their business needs. In addition to public and private limited companies, it is common in Andorra to establish holding companies. These companies, generally established as private limited companies, do not engage in direct commercial activity but focus on the management and administration of investments in other companies.
At Papers, we offer the most competitive rates, starting from 3,000 euros to create your company online, with online tracking and an intuitive dashboard.
To create a company in Andorra, you must provide a criminal record certificate apostilled according to the Hague Convention, a copy of the passport certified by a notary in Andorra, a resume, and a business plan briefly describing the activity to be developed. Gathering all this documentation is essential to avoid doubts and speed up the administrative procedures.
In case of questions about the documentation or process, it is recommended to consult a specialized advisor to ensure proper management and avoid mistakes.
