Setting up a company in Andorra: time, price and advice

Setting up a company in Andorra is the most common way for entrepreneurs to obtain their residence permit in the Principality. However, it is also possible to set up a company in Andorra without transferring the tax residence of its manager, as long as certain criteria are met (contact us to discuss your specific case).

The company incorporation process includes several steps, with different deadlines. However, it is not necessary to go to the last step (obtaining the commercial authorisation), as your residence permit as self-employed can be processed once the company has been registered (point 4 in the image, marked in yellow).

The time to keep in mind for the company to be ready to proceed with the residence procedures is between 2 and 3 months, depending on the administrative criteria used by the Andorran administration.

Steps

By way of summary, the different steps consist of:

1. Application for an Administrative Identification Number (NIA). This is a quick and essential procedure that will allow you to continue to carry out procedures with the Andorran public administration. People who are not yet resident in the principality will have to apply for it. The estimated time is two days.
2. Company name. Three options must be proposed as the “name” of the company, which must be approved by the Andorran Government. Once one of the options has been authorised, this resolution will be valid for six months (beware, it may expire and the granting of the name may “expire”). At this point, the client must inform of the main activity to be carried out by the company (its corporate purpose).
3. Application for foreign investment. This is the longest part of the process, although it is only necessary if the person is a non-resident. Thus, if a resident wants to open a new company, this part can be skipped. It takes between 30 and 40 calendar days (it is essential to calculate more days during holidays and peak periods, such as February-May). Different documents will be required for this procedure, the most important of which is the original and apostilled criminal record with a maximum age of three months. They must be presented from the countries of nationality, origin and residence and will most likely expire before they can be reused in the procedures of the natural person (obtaining a residence permit). For this reason, in the majority of processes they must be requested twice. It is worth noting that only apostilled certified records issued by competent ministries are accepted and that notarially certified records on criminal records are not accepted (a practice, for example, that occurs in countries such as Germany or the Netherlands).
4. Opening the bank account. Perhaps one of the most complex part of the process, given that Andorran banks follow a strict compliance system to verify your client profile and the origin of the funds. The law firm advising you will need to have drafted articles of association for the company, which will contain the essential information about the company. It will then be necessary to formalise the articles of association at the notary’s office, leading to the creation of the notarial deed of incorporation of the company.
5. Registration: Once the company is incorporated, the notary will send the necessary information to the Andorran company registry in order to proceed with the registration. This institution has between two and three weeks to formalise this registration, after which the application for residency as an individual can be submitted to the immigration service (if all the necessary documentation is already in place for the individual). This is a key point in the process, which is why you will find it marked in yellow in the image.
6. Comerç: Finally, the next steps are the opening of the business or comerç (the importance of which is explained below) and the registration with the social security and tax authorities, among others. In order to obtain the opening of the business, the licence to start up activities, it will be necessary for the company to have the Business Registration Card. In order to obtain this, it will be necessary to have a place where to establish the business (either your own home if the owner authorises you to do so, a coworking space, office, premises…). It will take between 60 and 70 days from the processing (having all the documentation) to obtaining the card.

Cost (price)

The fees and costs associated with the procedures necessary to set up a company in Andorra (Application for reservation of company name, Application for foreign investment, Public deed, Registration in the register, application for trade name and authorisation to open for business) are in excess of €2,000, although the final price will depend on whether the company is an SL (cheaper) or an SA. This amount does not include the fees of a professional firm to accompany you in the process. Write to us to get a quote for your case.

Costs associated with a company

Having a company in Andorra, as in any other country, entails a series of tax and fiscal obligations. Among them:

• Corporate tax return (contact us if you are looking for an exceptional service) once a year. Corporate tax in Andorra has a maximum tax burden of 10%. Remember that you can deduct items such as employee expenses, office expenses or social security contributions.
• As for dividends, you will have to pay 10% as corporate tax when you distribute them, but you will not pay anything else for them (for example, no personal income tax will be applied on them).
• IGI (IVA, VAT) return on your income, invoices and services, payable monthly and/or quarterly.
• Annual trade and company tax (comerç), which will depend on the activity of the company and its location within the country, as well as the size of the offices.
• Social security contributions for your employees. In total, this will be 22%, 15.5% will be paid by the company and 6.5% will be deducted from the employee’s salary. You will also have to pay your self-employed contribution.
  Expenses for recurring tax and accounting advice from an accountancy firm, who will handle aspects such as local taxes, IGI, your employees’ salaries and international invoicing with companies or suppliers in other countries.

Useful information

Below we are going to share information that may be of interest if you are thinking of setting up a company to move your residence to Andorra:

Key points

In the image you can see an outline of the process to follow for the incorporation of the company. Two milestones (or crucial points achieved) that will allow you to move forward are:

• The registration of the company in the Register of Companies in Andorra. This takes place between two and three weeks after signing the public deed at the notary and means that the application for residency as a natural person can now be presented to the immigration service.
• Authorisation to open for business (comerç). This is the last step of the process and obtaining the Business Registration card will allow you to make significant advances such as:
  a) Being able to start invoicing from your Andorran company.
  b) Unblocking your business bank account
  c) Hiring employees in the country

Advice

It is not always necessary to set up a company from scratch. Sometimes it is cheaper and quicker to buy an existing company that somebody else wants to sell or dissolve. This will save a substantial part of the process and most of the fees. However, you will need to have the contacts to find a company that is in the process of being dissolved.

There are two types of companies in Andorra:

• Limited Company (the most common). The minimum share capital will be €3,000 and you will have participations (and not shares). This is the recommended option in the vast majority of cases, especially for companies with few partners and SMEs.
• Public Limited Company. With a minimum capital of €60,000, your shareholding will be distributed in the form of shares. It is designed for banks, investment funds, insurance companies or companies that are to be listed on the stock exchange.
  A natural person can have more than one company, as well as more than one business.