Detailed Guide to Company Formation in Andorra

Andorra is a popular business environment for entrepreneurs who want to start their own company. We’ll go into more detail below, but the in-a-nutshell reason for incorporating in Andorra is that you get many of the benefits of Europe without the high taxes.

It’s also a favourable place to register an off-shore company if you’re not a resident of Andorra.

Because there are no stock exchanges in Andorra, the government-run registries take a relatively active role in tracking how company ownership is traded.

Andorra’s small size means that rules for company formation in Andorra might be different from what you expect. For both of these reasons, it’s important to have a plan before you set out to incorporate an Andorran company.

The Andorran government also requires companies to register detailed articles of association that spell out how a company will conduct business. It can be somewhat time-consuming to change these, so buying an existing “shelf company” is usually not a viable workaround for the company formation exercise.

This article will walk you through the most important parts of the process.

Types of Andorran Company Formations

Just like all other places in the world with a formal structure for companies, there are choices to make when it comes to forming a company in Andorra.

First, it is important to choose the most appropriate type of corporate structure when registering. Options vary depending on how much liability the owners want to bear and the size of the company. Here, the government allows the following registration types.

Societat Limitada (S.L.)

This is the formation to choose for most small businesses and is the Andorran equivalent of a limited liability company. A Societat Limitada needs to have €3,000 of capital at its time of formation.

Societat Limitada Unipersonal (S.L.U.)

Essentially a Societat Limitada with only a single shareholder (hence the “unipersonal”). Similarly, an S.L.U. needs to have €3,000 of capital at its time of formation.

Societat Anonima (S.A.)

Larger operations who want a many-shareholder ownership structure will want to choose this type of company registration. At €60,000 the capital minimums are higher for a Societat Anonima.

Other Options

Andorra offers the option of forming an unlimited liability partnership (Societat Colectiva) or a sole proprietorship but these are less popular. The costs to incorporate are low enough that it usually makes sense to do so in order to gain the limitations on liability.

Costs of Registering the Various Types of Companies in Andorra

The total cost to register an Andorran company will depend partly on whether you hire a consultant to help you work through the process. If you decide to do it on your own, the costs to form a company in Andorra will be:

Societat Limitada: Approximately €1,800, including notary fees and name-registration fees.

Societat Anonima: Also about €1,800, including notary fees and name-registration fees.

The full-service option will cost at least €4,000 and some consultants can charge upwards of €25,000.

Offshore Company Formation in Andorra

As of October 2012, it has been legal for an Andorran company to be owned (in whole or part) by a non-resident. If the non-resident owners have a total stake greater than 10% of your company there will be an extra layer of government approval needed.

Those non-residents who want to form a company in Andorra must seek approval from the Department of Foreign Investments. If you are thinking of going down this road, you should consult our detailed primer on setting up an Andorra offshore company.

Steps for the Andorra Company Formation Process

Once you’ve settled on a type of company, the process is fairly straightforward. The steps essentially involve:

  1. Registering a name: The idea here is to make sure that your company name can’t be easily confused with one that is already registered. Any language that uses Latin characters can be used for the name; it no longer has to be in Catalan.
  2. Applying for Andorran company incorporation: This is a fairly intensive process that requires you to provide a fully-researched business plan; draft articles of incorporation; identification for all directors, including criminal-record checks from your country of birth and country of residence; and proof from your Andorran bank that you have an account with the required amount of capital deposited into it.
  3. Having a notary register your company: You’ll have to work with a notary to have your company added to the Registre de Societats Mercantils.
  4. Completing your government registration: This step includes providing a copy of your company’s lease to the local government (commune) and requesting a tax identification number from the tax administration.
Andorra company formation regulations require applicants to present a detailed business plan at the time of incorporation.
Andorra company formation regulations require applicants to present a detailed business plan at the time of incorporation.

How Long Does it Take to Form a Company in Andorra?

All levels of government approval for a straightforward Societat Limitada can usually be had within a month. But if the process runs into complications it can take quite a bit longer.

Other than not providing the required documentation, one common place that applications can run into difficulty is if they are overly broad in defining how a company will operate.

The Andorran government seems to want to prevent the formation of “off-the-shelf” companies that can be sold to future investors who want to avoid this process.

If you have a many-shareholder structure and decide to register a Societat Anonima, it’s probably appropriate to consult a lawyer who can walk you through the process, including its timeline as these are more complex.

The Basics of Andorra Company Formation

Andorra has a dynamic business environment, with a low corporate tax rate, very generous capital gains taxes, an increasingly friendly outlook on foreign investments and a solid regulatory structure.

All of that makes company formation in Andorra an attractive option.

Before incorporating your company in Andorra, keep in mind that:

  • You need to decide what type of company you want to register.
  • You will need to pay the appropriate fees and meet the other regulatory requirements for documenting who you are and how your company will operate.
  • If you are not a resident of Andorra, there will be extra steps involved in your company formation process.

Even though the process is quite straightforward for company incorporation in Andorra, detailed information on its particulars can be difficult to find.

Hopefully, this guide helps you through the exercise. Keep in mind that there are plenty of experienced consultants like myself, ready to help.