Andorra Company Formation & Taxation – Frequently Asked Questions

Andorra, a small but economically stable principality nestled between France and Spain, has become an attractive destination for international entrepreneurs and investors seeking tax efficiency and business-friendly regulations. Known for its low corporate tax rates, political stability, and strategic location in Europe, Andorra offers a favorable environment for company formation, especially for businesses in finance, consulting, digital services, and trading.

This Frequently Asked Questions (FAQ) page provides clear, concise answers to the most common inquiries about forming a company in Andorra. Whether you’re looking to establish a private limited company (Societat Limitada, or SL), relocate your digital business, or set up a holding company, this guide will walk you through the basics of registration, legal requirements, and compliance procedures.

Foreign investors can benefit from Andorra’s transparent regulatory framework, low tax burden (corporate tax capped at 10%), and growing infrastructure for modern businesses. However, setting up a company in Andorra involves several steps, including obtaining foreign investment approval, registering with local authorities, and meeting residency or directorship conditions.

With no exchange controls, a stable banking system, and growing recognition as a legitimate low-tax jurisdiction, Andorra is ideal for those seeking a long-term business base in Europe with favorable fiscal conditions. This FAQ aims to simplify the process by answering key questions about cost, timing, ownership rules, required documentation, and ongoing compliance.

If you’re considering incorporating a company in Andorra, this page will help you understand the fundamentals and prepare for a smooth and legally compliant setup. Use the questions below as your starting point to explore one of Europe’s most unique and tax-friendly business jurisdictions.

Frequently Asked Questions About Andorra Company Setup

This FAQ provides key insights into Andorra company formation for entrepreneurs, investors, and digital nomads looking to benefit from the country’s low-tax and business-friendly environment. Whether you’re planning to form a private limited company (SL), establish a holding company, or relocate a tech business, this guide answers the most common questions about the process. Learn about foreign investment requirements, residency options, tax obligations, and setup costs. With its strategic European location, favorable tax regime, and political stability, Andorra is an ideal choice for those seeking efficient company incorporation and long-term financial advantages.

Related FAQs & Resources:

🇦🇩 Andorra Company Formation FAQ

1. How can a foreigner start a company in Andorra?

To start a company in Andorra as a foreigner, you must first obtain foreign investment approval from the Andorran government. After approval, you can register a private limited company (Societat Limitada – SL), open a local bank account, and secure a registered office in Andorra. Depending on your business activity, you may also need to apply for residency or specific business licenses.
👉 Learn more about the process on our main Company Formation page.

2. Can foreigners own 100% of a company in Andorra?

Yes. Foreigners can own 100% of an Andorran company, provided they receive prior authorization for foreign investment. Ownership must be registered with the Ministry of Economy, ensuring full transparency under Andorran law.

3. What is the minimum share capital required to open a company in Andorra?

The minimum share capital for a private limited company (SL) in Andorra is €3,000. This amount must be deposited into an Andorran corporate bank account before completing the registration process.

4. How much does it cost to form a company in Andorra?

The total Andorra company formation cost ranges from €5,000 to €10,000, depending on legal fees, notarial costs, government charges, and optional services such as residency or licensing support.

5. What are the tax advantages of setting up a company in Andorra?

Andorra’s tax system is one of the most attractive in Europe. Corporate tax is capped at 10%, and there is no wealth, inheritance, or capital gains tax on most types of income. The IGI (Andorran VAT) rate is just 4.5%, offering significant tax savings for businesses.

6. What types of companies can be registered in Andorra?

Foreign investors can establish several business structures, including:

Societat Limitada (SL) – Private Limited Company (most common)
Societat Anònima (SA) – Public Limited Company
Holding Company
Sole Proprietorship
The SL structure is preferred for its flexibility, lower capital requirement, and limited liability protection.

7. Do I need to live in Andorra to register a company?

You do not need to reside in Andorra to form a company. However, you must appoint at least one local administrator or resident director. Many entrepreneurs choose to obtain Andorran residency for easier management and better tax optimization.

8. How long does it take to register a company in Andorra?

The company registration process in Andorra typically takes 4 to 6 weeks, covering foreign investment approval, company incorporation, tax ID registration, and bank account setup.

9. Is Andorra considered a tax haven?

No. Andorra is not a tax haven — it has transparent tax laws and complies with OECD and EU standards. The country maintains double taxation treaties with several nations, making it a reputable jurisdiction for international business.

10. Can my Andorran company open a local bank account?

Yes. Once your business is incorporated, you can open a corporate bank account in Andorra. Banks require documentation such as the company deed, shareholder identification, and a basic business plan.

11. Is a registered office required for an Andorran company?

Yes. All companies must have a registered office address in Andorra for legal correspondence and tax administration purposes. This can be a virtual office or physical workspace, depending on your needs.

12. What are the annual reporting and accounting requirements?

Andorran companies must file annual financial statements, pay corporate taxes, and submit activity reports to the tax authorities. A licensed local accountant should manage compliance and filings.

13. Can I move my digital or online business to Andorra?

Absolutely. Andorra is a top destination for digital entrepreneurs. You can register an SL for your IT, consulting, or e-commerce business, obtain residency, and enjoy low taxes on global income.

14. Is Andorra suitable for holding or investment companies?

Yes. Andorra holding companies benefit from low corporate tax, no withholding tax on dividends in many cases, and favorable international structuring options. Compliance with EU standards ensures legitimacy and flexibility.

15. How do I apply for foreign investment approval in Andorra?

To receive foreign investment approval, you’ll need to submit:

Passport and personal documents
Business plan and activity outline
Proof of shareholding structure
Criminal record certificate
Approval usually takes 2–4 weeks and is mandatory before company incorporation.

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💰 Andorra Taxation FAQ

1. What is the corporate tax rate in Andorra?

The standard corporate tax rate in Andorra is 10%, one of the lowest in Europe. Startups and small businesses may qualify for reduced rates during their first operational years.

2. Does Andorra have a value-added tax (VAT)?

Yes. Andorra’s Indirect General Tax (IGI) functions like VAT and is only 4.5%, significantly lower than in neighboring EU countries.

3. Are there double tax treaties in Andorra?

Yes. Andorra has signed double tax treaties with several countries, including France, Spain, Luxembourg, Portugal, and the UAE, helping avoid double taxation on income and profits.

4. Is there a capital gains tax in Andorra?

In most cases, capital gains are tax-free, especially when earned through company shares or long-term investments. However, real estate-related gains may be subject to specific taxes.

5. Do Andorran companies pay withholding tax on dividends?

No. Dividends paid by Andorran companies to shareholders are exempt from withholding tax, making Andorra a highly efficient jurisdiction for profit distribution.

6. Are there personal income taxes in Andorra?

Yes, but they are low. Personal income tax (IRPF) is progressive, with rates ranging from 0% to 10%. Many entrepreneurs relocate to Andorra for these favorable tax conditions.

7. Is there wealth or inheritance tax in Andorra?

No. Andorra has no wealth tax or inheritance tax, which provides long-term estate planning advantages for business owners and investors.

8. How are foreign-sourced profits taxed in Andorra?

Foreign income is generally taxable only if derived from business activity managed in Andorra. Proper corporate structuring helps optimize international tax exposure.

9. Do I need an accountant or tax advisor in Andorra?

Yes. To comply with Andorran accounting and tax laws, every company must appoint a licensed accountant to handle financial statements, IGI returns, and corporate tax filings.

10. How can I reduce my tax burden in Andorra legally?

You can legally minimize taxes by choosing the right company structure (SL or holding company), reinvesting profits, and leveraging Andorra’s double taxation treaties.
👉 Learn more strategies on our main Company Formation page.

Interested in setting up an offshore company in Andorra?
Visit our Andorra Company Formation page for detailed guidance, packages, and expert support tailored to your needs.

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