Creating a Company in Andorra: Benefits, Steps and Costs
Unlock New Opportunities by Establishing Your Company in Andorra
Andorra, a small principality nestled between France and Spain, offers an exceptional living environment and an attractive tax framework for entrepreneurs. With its dynamic financial sector and low tax burden, establishing a company in Andorra is an excellent option for those looking to develop their business in a favorable environment. In this article, we’ll guide you through the advantages, steps, and costs associated with creating a company in the Principality of Andorra.
Multiple Benefits of Creating a Company in Andorra
Advantageous Corporate Tax Rate
One of Andorra’s main attractions for entrepreneurs is its corporate tax rate of just 10%. Compared to the OECD average of 23.5% or rates like 21% in the United States and 19% in the United Kingdom, this represents a significant advantage. Furthermore, depending on your activities, you’ll be exempt from many contributions in Andorra, where only a few fixed annual government taxes need to be paid.
Among the Lowest Social Security Contributions in Europe
As an active resident in Andorra, you must participate in the social security system and pay social contributions. However, these charges are significantly lower than those in most developed countries. Since 2020, mandatory social security contributions for self-employed business leaders have been fixed at €468 per month, regardless of income level. This compares favorably to countries where charges can represent up to 40-45% of remuneration.
Optimize Your Costs with an Andorran Company
Qualified Workforce at Competitive Costs
In Andorra, average loaded salaries amount to approximately €2,200. This gives you access to a highly qualified workforce at costs 20-40% lower than in most Western European countries or major US cities. This difference allows you to invest more in developing your company, optimizing your return on investment.
Advantageous Cost of Living for Entrepreneurs
When establishing your company in Andorra, you’ll notice an automatic increase in your disposable income while reducing expenses. Consumer goods are untaxed, and VAT is only 4.5%, resulting in a significantly lower cost of living compared to most developed countries.
Leverage Andorra’s Multilingual Environment for Business Development
Privileged Access to Multiple Markets
Thanks to Andorra’s multilingual environment, your company will benefit from direct access to European, Latin American, and international markets. While Catalan is the principality’s official language, most of the population is fluent in Spanish, French, English, and Portuguese. This linguistic diversity is a major advantage for companies looking to establish themselves in these promising markets.
Key Steps in Creating an Andorran Company
Company Name Reservation
The first step involves reserving a company name with the Andorran government. You’ll need to propose three different names for your company, in order of preference. If a name is already in use, the administration will automatically reserve the next one on your list.
Obtaining Foreign Investment Authorization
Since the Foreign Investment Law of June 21, 2012, non-Andorran investors can own 100% of a company’s capital in Andorra. You’ll need to prepare a foreign investment file and submit it in person to the government.
Opening an Andorran Bank Account
Opening a bank account is a crucial step for creating your company and obtaining residency in Andorra. Before registering your company, you’ll need to deposit your share capital in this account.
Signing Articles of Association Before a Notary
Your company’s official establishment will be formalized when signing the articles of association before an Andorran notary. This step is mandatory and must be completed in the principality.
Registration in the Companies Registry
Once the articles are signed, you must register your company in the Andorran Companies Registry. This is when it acquires its legal personality. Registration fees amount to €1,016.67 for an LLC and €1,480 for a Corporation. An annual fee of €214.21 is also required if your company is registered in the Trade and Industry Registry.
Additional Administrative Procedures
Obtaining Business License from the Municipality
After creating your company, you must obtain a business license from the municipality where it will be located. This process notably requires declaring your electricity contract number and fire extinguisher maintenance contract, both mandatory elements.
Registration with the Andorran Social Security Fund (CASS)
All self-employed individuals must register with CASS within three days of starting their activity. This step is essential to benefit from Andorran social security coverage.
Labor Costs in Andorra: An Advantage for Entrepreneurs
A Simplified and Advantageous System
The social security system in Andorra only has two branches: health and retirement. The absence of unemployment insurance provides employees with stable financial situations and job security. Payroll costs related to social security are particularly attractive, with a rate of 14.5% for employers and 5.5% for employees.
Competitive Salaries
In Andorra, the average monthly salary is approximately €1,950 for a 40-hour week. The minimum wage is set at €1,017.47 per month. These remuneration levels, combined with low social security contributions, allow companies to control their costs while offering attractive conditions to their employees.
Accounting and Social Contributions in Andorra
Business-Friendly Accounting Requirements
The Andorran accounting system is known for its transparency and administrative simplicity. Here are the main obligations to be aware of:
- Accounting in accordance with International Financial Reporting Standards (IFRS)
- Annual preparation of financial statements including:
- Balance sheet
- Income statement
- Cash flow statement
- Notes to the accounts
- Filing of annual accounts with the Companies Registry within 6 months of year-end
- Retention of accounting documents for 6 years
Audit and Control
An external audit becomes mandatory when your company meets at least two of the following criteria for two consecutive years:
- Balance sheet total exceeding €3.6 million
- Net turnover exceeding €6 million
- Average workforce exceeding 25 employees
A Modern and Advantageous Social Security System
Andorra offers a balanced social protection system that combines efficiency and controlled costs for businesses.
Contribution Structure
- Employer contribution: 14.5% of gross salary
- 7.5% for health insurance
- 7% for retirement
- Employee contribution: 5.5% of gross salary
- 3% for health insurance
- 2.5% for retirement
System Benefits
- Contributions capped at 22% of total payroll
- No additional unemployment insurance charges
- Comprehensive social coverage including:
- Health and maternity insurance
- Retirement pension
- Disability coverage
- Workplace accident insurance
- Fully digitized declaration and payment procedures
For Self-Employed Workers
Individual entrepreneurs and company directors benefit from a specific regime with:
- A fixed monthly contribution of €468
- Option to choose a higher contribution base for improved coverage
- Simplified registration with CASS (Andorran Social Security Fund)
This system offers an excellent cost-to-protection ratio, allowing companies to control their social security costs while ensuring quality social protection for their employees. Administrative simplicity and cost predictability are major advantages for entrepreneurs looking to establish themselves in Andorra.
Launch Your Andorran Company Today
Creating a company in Andorra offers numerous advantages for entrepreneurs, both in terms of taxation and labor costs. With a simplified system and clear administrative procedures, the principality stands out as a destination of choice for foreign investors looking to develop their business in a favorable environment. Don’t wait to seize this opportunity and start creating your company in Andorra today!
