Low Taxes, Modern Jurisdiction, and Good Infrastructure
Why create a company in Andorra?
Andorra used to be seen as a tax haven, but it has since become a country with a modern jurisdiction and a very low and transparent tax burden. As a result, creating companies in Andorra for foreign investors is now a much more feasible option since the country allows new or existing companies to take advantage of the tax benefits. For this reason, Andorra is one of the most attractive countries in Europe for investors to incorporate their companies.
Procedures for creating a company in Andorra
To create a company in Andorra, you need to follow a series of mandatory official procedures:
1. Request a reservation of company name. This is necessary to differentiate your company from other companies in the different official bodies that you may need to communicate with. You'll need to get a negative certification of the company name, which ensures that the name will be exclusive to your company.
2. Create the statutes of the company. For this you might want to hire a local law firm with expertise in incorporations, specifically acting on behalf of foreign investors.
3. Deposit the initial share capital in a bank in Andorra. You'll need to open an account by providing the required documentation to the bank of your choice.
4. Incorporate the company with a notary. Formalise the statutes with a notary and register the company with the Andorran Mercantile Registry.
5. Prepare your ramp-up to initiate the business activity. Once the company is registered with the Mercantile Registry, you have six months to start the company's activity. This is a critical period of time, and you want to nail it the first time.
Advantages and benefits of creating a company in Andorra
1. Strategic location: Andorra is located between France and Spain, and is about two hours away from major cities like Barcelona and Toulouse.
2. Unbeatable infrastructure: Andorra has one of the highest per capita incomes in Europe, with high-speed internet available throughout the country, excellent healthcare infrastructure, and trilingual education in schools and universities.
3. Agreements with other countries: Andorra has 7 double taxation agreements with countries like Spain, France, Luxembourg, Liechtenstein, Portugal, and the United Arab Emirates. These agreements aim to avoid cases of double international taxation by implementing measures that involve both contracting countries.
4. Investment: Creating companies in Andorra makes it easier for businesspeople and directors to obtain residence, and the country values foreign investment highly.
5. Taxes: Income tax in Andorra is between 5% and 10%, while corporate tax is between 2% and 10%. Andorra has the lowest tax rates in the EU. Social security contributions are also among the lowest in Europe, and there's a low VAT on sales (4.5%). There is no inheritance or inheritance tax in Andorra.
Types of business companies in Andorra
There are two types of models for creating companies in Andorra:
A) Public Limited Company (SA): You'll need a minimum capital of 60,000 euros to create one of these companies. They're designed for large companies and allow the capital to be distributed among the different shareholder members. You'll need to pay €1,480.54 for registration and registration expenses and €935.50 per year for maintenance expenses of the registration sheet. If you want to create a sole proprietorship, you can consider the Sociedad Anónima Unipersonal (SAU).
B) Limited Company (SL): You'll need a minimum capital of 3,000 euros to create this type of company, which is aimed at small businesses. Other expenses must be taken into account, such as the registration fees of the company, which represent a cost of €1,016.67 and the annual maintenance costs of the registry of €851. In this case There is also the Sociedad
C) Limitada Unipersonal (SLU), intended for companies managed by a single person.
To create any company in Andorra , it must have its tax domicile in the Principality , even if both its suppliers and customers or shareholders have a different location.
Companies created in Andorra, in addition to having their registered office, must have an administrator , regardless of the activity they carry out.
All companies created in Andorra have a tax system very similar to that of Spain and must submit tax returns quarterly and annually.
Labor costs and salaries in Andorra
It must be taken into account that when a company is incorporated in Andorra, compared to France or Spain, the costs will be lower, with the Social Security participation being an average of 15% lower .
On the other hand, salaries in Andorra are estimated to be around €1,950/month on average, with the minimum salary being €1,083.33 per month . In this way, tax savings on profits are on average 30% less, both in Spain and France.
Other advantages
Company creation in the Principality of Andorra
— Some of the non-tax advantages for creating your company in Andorra is that it is a great country to live in, as it has spectacular landscapes, and large and unbeatable ski slopes for lovers of this sport.
— Direct means of communication with Spain and France. The communication routes are in the process of improvement, at the same time that the country offers 100% fiber optic coverage throughout the territory, while the average coverage throughout the EU is only 21%.
— Attractive for online businesses and freelancers: Office rentals are from €400, low prices compared to those of Spain and France.
— Municipal expenses do not amount to more than €500 a year, from which companies can be deduced as expenses.
— Its healthcare system is very competitive, as it has a qualified medical team and also coverage in other countries, thanks to offshore agreements.
— Its educational system offers three different models of high quality, and is also free of charge. There are of course other private and specialised education options.