The Principality of Andorra is a landlocked microstate sandwiched between France from the north and east and Spain to its south and west. The country is headed by two co-princes; the president of France and the Bishop of Urgell in Catalonia.
During the last decade, Andorra shifted from being a tax haven to a country with an advanced tax system. Low taxes and a transparent tax system instill confidence in investors’ minds; local and foreign alike. Foreign investors should expect trained state machinery and personnel, making the creation of companies easier, transparent, and swift.
Today, Andorra is one of the most attractive locations for foreign investors to establish their presence at the heart of Europe.
Types of companies in Andorra
Andorra offers two types of business structures for investors currently, the table below illustrates vital information related to both.
| S# | COMPANY TYPE | ANDORRAN NAME | MIN.REQUIRED PAID-UP CAPITAL |
| 1. | Public Limited Company (PLC) | Sociedad Anonima (SA) | €60,000 |
| 2. | Limited Liability Company (LLC) | Sociedad Limitada (SL) | €3,000 |
To establish and operate a company in Andorra, the investor(s) must be enrolled as tax residents of the country regardless of whether the company’s suppliers, customers, shareholders, etc. belong to different locations. The company must also have a registered business address and an administrator in Andorra and must file their tax returns annually or quarterly.
Sociedad Limitada – SL (LLC)
An LLC or SL is the most common choice for foreign investors as it requires very few steps for formation as well as low capital requirements. With a single shareholder and paid-up capital of €3,000 only, an SL can be established. The owners are not personally responsible for debts or losses in an SL, it is the company that is responsible for all liabilities and losses.
Cost of creation
The cost of registering an SA in Andorra may cost around €1,800 (approx.). The cost includes notarization, name/brand registration, and other state fees. This cost is true if the process is carried out by the investors, in the case where a consultant is hired, this cost will go up. On average, a consulting firm may charge anything between €3,000 to €20,000 for their services.
Sociedad Anonima (SA) – PLC
A public limited company is the structure of choice for companies that require large capital investments in a short period of time. Raising capital through bank loans is one way to fill the ante, the other more desirable method is to take the company public. It means that the owner(s) or stakeholders offer shareholding to the general public in form of company shares. The shares can be retained to earn dividends, in the long-run, or be traded on the stock market at favorable price points.
To back up the shares, companies secure their capital through one or more commercial banks by promising to return the capital along with the mutually agreed percentage profit. The capital pledged to the bank(s) as security is called the paid-up share capital. In Andorra, the minimum paid-up share capital required is €60,000. The pledged amount can be in cash or in-kind (asset, patent, real estate , etc.).
In return, the paid-up capital is distributed into shares (€1/share at least) and listed on the stock exchange. Usually, most of the time, the €60,000 distributed in shares will pull in more funds than this amount from the public. The company can then utilize this money to invest and make profits while returning the banks from the profit earned.
Cost of creation
The cost of registering an SA, if done without a consultancy firm, may round up between €1,800-€2500, the same as SL. It includes the cost of notarization, translation, state fees, etc.
Cost of Incorporation
The cost of incorporating a company depends on the size of capital, type of business, and other factors that vary from case to case. However, the most basic costs involved during corporation are listed below – all costs are approximations and may be slightly different in actual
- Name reservation for the company – €5
- Notary fees for incorporation – €600
- Companies House registration fees – €1,016
- Commercial license fee – €415
- Immigration tax – €190
- Local consultation fee (optional and varying) – €5,000 – €20,000
Cost of workforce
The salaries in Andorra are less compared to France and higher compared to Spain. Averaging €2100/m for skilled staff. The revised monthly wage as of 2021 is €1,100/m. The records from the National Institute of Statistics show that after factoring in the social security contributions, Andorra has a 12% higher salary than Spain. Salaries in France hovers at €2,951/m, adding the 32% social security contributions, it may go up to €3,839/m compared to €2,426 after social security is factored in, in Andorra.
Perpetual costs/expenses
Every business will incur expenses during its operations in the form of rent, utilities, insurance, logistics, labor, renovations, etc. The below list reflects some of the costs that a business shall factor into its budget at the time of formation to save itself from any surprises in the future.
Office rent
Office rents in Andorra are less compared to its neighbors; Spain and France. Depending on the size and location of the office, it may cost between €400 to €2,000 per month. The rent does not include utilities or furniture in usual cases. An office in prime areas such as San Julia De Loria can go as high €2,500/m for a 900 sq. ft office
Municipal expenses
Municipal facilities such as garbage collection, basic security, street lights, etc. are included in one lumpsum fee of up to €500 annually. This fee may vary between different areas of the state.
Utilities
Basic utilities include heating, electricity, water, garbage collection from the premises, internet, etc. Electricity in Andorra is cheaper than in France or Spain; A two-room office may incur €100-€200/m expense on electricity (depending on use). Similarly, heating, garbage collection, etc. may cost up to €50/m.
Internet services in Andorra are reliable, and based on fiber-optics, but a bit pricy. An eight-megabyte connection may cost up to €41/month. The state does offer free wi-fi internet services in public areas, which run ads after every 15 minutes and provide 5Mbps speed.
Advantages of doing business in Andorra
While there may be a few demerits of establishing a business in Andorra, there are many positive and advantageous factors to focus on, as listed below:
- Geographical and cultural connectivity to Europe’s economic giants (Spain and France)
- 100% internet coverage based on fiber optics (continuous upgradation of the system)
- Best of freelancers, entrepreneurs, and work-from-home individuals
- Stable government and state policies
- Breathtaking sites, ski resorts, landscapes, etc.
You may also find these articles helpful
Guide on company registration in Andorra
Guide on company liquidation in Andorra
Breakdown of Ukraine company registration fees and expenses
