Doing business in Andorra
- How quickly can I set up a business?
- What is the minimum investment needed?
- How can I raise finance?
- What are the legal requirements for setting up my business?
- What structure should I consider?
- What advice can you give me in regards to payroll and taxation requirements?
- Is there anything else that I should know?
How quickly can I set up a business?
Between 30-60 days
What is the minimum investment needed?
The minimum Business capital starts at 3.000,00 Euros. In addition to the set-up expenses such as taxes, notary and statutes design.
The dividends distribution from the company to the shareholders are taxed at 0%.
How can I raise finance?
The capital must be contributed entirely by the partners.
Andorra does not belong to the European Union and therefore the European Union subsidies do not apply.
What are the legal requirements for setting up my business?
You might create a business by being a resident in Andorra or by being a non-resident (foreigner). The foreign investors shouldn’t have restrictions to set up their business, but the process will follow a different path than the one for residents
What structure should I consider?
What structure/s should I consider using for my business
You might create a new business structure in Andorra to take advantage of the low taxes applied in Andorra (maximum tax is10%) and enjoy the privileged geographical position of the Principality.
The most common structures that could be created are the International passive residence; the Branch of your overseas business; the Limited liability company; the Foundation
• The international passive residence allows you to keep working internationally and make your permanent residence in Andorra for 90 days. Ideal for International Professionals who stay maximum 90 days in Andorra and keep travelling to other countries to produce their income resources. But in none of the other countries they spend more than 180 days. Such a residence could apply to
– Professional sports athletes & team
– International lecturer
– International consultant
– International businessman
– Retired employees from Multinationals
– International e-professional (e-sports, e-gamer, influencer, youtuber)
– International financial rentier, since the capital gains from financial investments (stock markets) made by an Andorran Resident are taxed at 0%
• The creation of a branch of your overseas business implies:
– Not a separate legal entity but an extension of the overseas parent company
– No limited liability or ring-fencing of the Andorran operations
– The profits from this Permanent Establishment created in Andorra are liable to Andorran Corporation tax (Maximum 10% tax)
– Must file parent company accounts, prepared under Andorran Company Law, at Companies House for public inspection, even if these are not made publicly available overseas.
• The Limited Company/Limited Liability Company (SA/SL):
– Provides limited liability and ring-fencing to Andorran operations
– Gives a perception of a local business, with longevity
– Corporation tax to be paid on company profits.
– It could be created to expand your current activity in businesses such as R&D, Digital Marketing, Customer Care Center, Information and Data Technologies
– The benefits of this local business would be taxed at maximum 10%
• The foundation should be studied case by case in order to be approved by the Andorra Government and be taxed at 0%
What advice can you give me in regards to payroll and taxation requirements?
In-country advice about: locations
Payroll and HR requirements
Tax/regulatory and reporting
The minimum salary fixed by the Government for employees is 12.000,00 Euros per year
Personal Income Tax
– Taxpayers considered resident in Andorra are liable for Andorran tax on their worldwide income.
– Current Personal Income Tax rates in Andorra are 10% maximum.
– Capital Gains Tax Rates are 0% on Financial (Stock markets)
– Employers and employees must pay Andorran social security, which is called CASS. In general terms the total security amounts 22% of the gross pay check (employer contributes 15,5% and employee contributes 6,5%)
– Andorra has a Reciprocal Agreement with EU countries and many others, whereby when an overseas national of those countries is seconded to Andorra for a defined period of time and continues to pay social security in their home country, then the employer and employee are exempt from paying Andorra social security.
Corporate Income Tax
– Current Corporation Tax rates in Andorra is maximum 10% on EBITDA
– Dividends distribution to shareholders is 0%
– Shareholders income from business dividends are added to his annual IRPF (Personal Income Tax): maximum 10% tax
– VAT is a “goods and services tax” on supplies made, the standard rate of which is 4,5%. If a business makes taxable supplies then it MUST be registered for VAT.
– VAT taxable entrepreneurs are obliged to submit biannual VAT returns if annual turnover is less than 250,000€, quarterly from 250,000€ to 3,600,000€, monthly statements if annual turnover is higher than € 3,600,000.00.
The Andorran tax legislation means that it is a very attractive place to set up a holding company.
The Main Tax Benefits of the Holding Company are 100% exemption for dividends and capital gains realized on the disposal of shares (participation of at least 5% and minimum 10% of Corporate Tax applicable to the subsidiary, but minimum one year of possession of this corporate shares)
The presentation of all tax returns by companies must be obligatorily by electronic means, for which a digital certificate is required.
Is there anything else that I should know?
• Andorra belongs to the European Council. Juridical disputes not solved at the Andorran Courts may then be solved at European Supreme Court.
• Andorra is member of OECD and IMF. Several countries have signed tax agreements with Andorra to avoid double taxation and to allow transparent fiscal information. So far the countries that have non double taxation agreement with Andorra are:
– United Arab Emirates
– San Marino
– Coming soon: Italy, Germany
– Currently negotiating, with Monaco and San Marino, a “soft” entry to European Union.
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