What is a commercial company in Andorra?

An Andorran commercial company is a legal structure created by one or more individuals or legal entities who decide to pool their capital and skills to carry out an economic, commercial, or professional activity . Upon its registration with the Trade and Industry Register , the company acquires its own legal personality , distinct from that of its partners.

In Andorra, two main forms exist:

• The Limited Liability Company (SL) , suitable for entrepreneurs and SMEs.

• The public limited company (SA) is preferred for large-scale projects, holding companies or significant investments.

Each structure can be formed by a single partner (sole proprietorship) or by several .

What is the minimum share capital?

• Limited Liability Company (SL) : minimum capital of €3,000 .

• Public limited company (SA) : minimum capital of €60,000 .

These amounts must be fully subscribed and deposited before the official registration of the company.

Where should the head office be located?

Every Andorran company must have its registered office located within the territory of the Principality of Andorra . This office may be an office, an approved coworking space, or a business address that complies with local regulations.

How is a company managed?

The governance of a commercial company is based on its General Assembly , the decision-making body that decides on major issues:

• amendment of the statutes,

• approval of the accounts,

• allocation of results,

• appointment or removal of directors,

• transformation, merger or dissolution of the company.

Decisions are taken by a majority of the capital represented , which must cover at least one third of the share capital.

The administration can be organized in several ways:

• Sole administrator ;

• Joint directors (collective decision);

• Jointly liable directors (individual action);

• Board of Directors (collegial).

In the case of a single-member company, the sole shareholder exercises the powers of the General Meeting.

What are the steps involved in setting up a commercial company in Andorra?

1. Company name reservation: An application is made to the Andorran Government to reserve the company name (valid for 6 months – cost: €5.69).

2. Foreign investment authorization: Any foreign participation exceeding 10% of the capital requires official authorization.

3. Drafting and signing of the articles of incorporation The articles of association are drafted and signed before an Andorran notary .

4. Registration with the Trade and Industry Register: The company acquires its legal existence upon registration.

   • SL company : registration fees €1,016.67, annual membership fee €851.

   • SA company : registration fees €1,480.54, annual membership fee €935.50.

1. Obtaining operating authorization Before starting operations, municipal authorization is mandatory depending on the location of the business.

Companies engaged in commercial, industrial or service activities must be registered with the Trade and Industry Register.

Sole Proprietor

Who can be a sole proprietor in Andorra?

A sole proprietor is a legally recognized individual, of legal age, who freely manages their assets and regularly conducts a commercial, artisanal, or professional activity in their own name. Minors or individuals under guardianship may do so through their legal representatives. Foreigners wishing to engage in economic activity must obtain Andorran residency before commencing their business.

What is the responsibility of the sole proprietor?

A sole proprietor is personally liable for all business debts , without distinction between business and personal assets. In the event of marriage, the spouse's assets may be affected depending on the chosen matrimonial property regime .

Do you need authorization to conduct business in Andorra?

Yes. Any individual or legal entity wishing to conduct commercial, industrial, or service activities in Andorra must obtain several administrative authorizations before commencing operations. These procedures ensure the company's compliance with applicable legal, environmental, and local regulations.

What is the first step?

The first step is to reserve the company's trade name with the Comú (town hall) of the relevant parish. This reservation protects the chosen name for the duration of the incorporation process and is a mandatory preliminary step before registration.

What is municipal authorization?

The municipal permit is issued by the town hall (Comú) of the location where the business is established. It is required for:

• to open a business , a factory or an office ,

• modify the authorized activity ,

• change of ownership or business name ,

• close an establishment.

Each change to the activity or status of the company must therefore be validated by the municipality.

When is government authorization required?

Government authorization is required when the activity has a national impact or requires specific regulations (health, environment, accessibility, safety, etc.). The application is submitted to the Comú , which forwards it directly to the Commercial and Industrial Registry for final approval by the Government of Andorra.

Before this authorization is granted, the project proponent must provide information proving that their establishment complies with the legal requirements regarding:

• hygiene and public health,

• safety and accessibility,

• environmental impact.

These checks ensure full compliance of the operating site .

What is the cost of registering?

Registration with the Andorran Trade and Industry Register (RCI) is mandatory for any company authorized to conduct business. Registration fee: €201.53 (official rate set by the Andorran Government).

A. Government taxes and duties

What is the registration tax for holders of economic activities?

Any company or entrepreneur carrying out a commercial, industrial or service activity in Andorra must be registered in the Register of Holders of Economic Activities , which includes:

• the Companies Register ,

• the Trade and Industry Register ,

• and the Register of Liberal Professions .

This registration constitutes the event triggering the annual tax . Amount: €214.21 per authorized commercial register.

Asset-holding companies or those not carrying out any economic activity in the territory are not required to register with the Trade Register, but must pay an annual fee to the Companies Register :

• €851 for a limited liability company (SL)

• €935.50 for a public limited company (SA)

Registration fees are also payable upon incorporation:

• €1,016.67 for an SL company

• €1,480.54 for a public limited company (SA)

Liberal professions and independent professionals affiliated with a professional body must pay a specific contribution of €426.40 per authorized activity.

What is IGI (General Indirect Tax)?

The General Indirect Tax (IGI) is the Andorran equivalent of VAT. It applies to the delivery of goods, services , and imports , with a simple system and very competitive rates:

Rate Type Description Rate General Rate Standard Activities and Services 4.5% Reduced Rate Essential Products (Health, Food, Culture) 1% Special Rate Certain Specific Sectors 2.5% Increased Rate Banking and Financial Services 9.5% Super-Reduced Rate Exports and Specific Cases 0%

This tax system makes Andorra one of the most attractive and transparent countries in Europe .

How does corporate tax work in Andorra?

Corporate income tax (CIT) is a direct and personal tax applied to the net profits of legal entities.

• General rate: 10%

• Tax period: corresponds to the fiscal year, with a maximum duration of 12 months.

• Payment: Deposit required every September 1st

The taxable base is determined from the accounting profit adjusted according to Andorran tax rules. Reductions and deductions are provided for:

• job creation ,

• productive investments ,

• the exploitation of intangible assets ,

• and the prevention of international double taxation (through tax treaties, particularly with France).

Each company must have a tax registration number (NRT) issued by the Government of Andorra.

How is the income of individuals taxed?

Personal income tax (IRPF) is direct and progressive , with a maximum rate of 10% . It applies to all income received by Andorran tax residents, whether they are:

• salaries ,

• stemming from economic activities ,

• or derived from movable or immovable capital .

The following are considered tax residents :

1. People living more than 183 days a year in Andorra.

2. Those whose center of economic interests (businesses, investments, assets) is located in the Principality.

Income is classified into two categories:

• General income : wages, economic activities, rents.

• Savings income : interest, dividends, capital gains.

The legal deductions and allowances relate in particular to:

• the main residence ,

• social security contributions ,

• family expenses .

The annual declaration must be filed between April 1st and September 30th of the following year.

How are non-residents taxed?

Non-resident taxpayers are subject to a specific tax on income generated in Andorra , whether received by natural or legal persons.

• General rate: 10%

• Reduced rate: 1.5% for reinsurance transactions

• Specific rate: 5% for certain royalties

The following are exempt :

• income from work,

• dividends from a stake of less than 25%

• and capital gains from the sale of shares in Andorran funds or companies.

Non-resident taxpayers must appoint a local tax representative to ensure compliance and monitoring of their obligations.

B. Municipal taxes and duties

What is the registration tax for commercial and professional activities?

This is a municipal tax levied by the parish (Comú) where the business is located. This tax applies to all economic, commercial, or professional activities carried out locally. The amount varies depending on:

• the parish in question ,

• the surface area of the premises ,

• and the nature of the activity .

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What does the establishment tax consist of?

The establishment tax is due when:

• from the opening of a new business or office,

• of a change of ownership or company name ,

• or the transfer of the activity to another municipality.

The amount of this tax depends on the location and size of the company .

What are the other municipal expenses?

Companies holding an operating license must also pay annual fees for public services such as:

• lighting ,

• road maintenance ,

• public hygiene ,

• or waste collection .

These fees, which vary depending on the municipality, are generally calculated as a percentage of the establishment tax amount .

Social security system and work permits in Andorra

What is the CASS and who needs to be affiliated with it?

The Andorran Social Security Fund (CASS) is the body responsible for social protection in the Principality. Membership is mandatory for all workers:

• employees,

• executives or those in similar positions,

• and self-employed workers carrying out an economic activity in Andorran territory.

CASS guarantees health coverage , retirement contributions , as well as social and disability benefits .

What are the social security contribution rates in Andorra?

Contributions vary depending on professional status :

For employees:

• 6.5% payable by the employee,

• 15.5% to be borne by the employer.

In certain specific cases, when only the general branch is covered, the rates are reduced to:

• 3% for the employee,

• 7% for the employer.

For self-employed workers:

Self-employed individuals contribute 22% of the reference income calculated on the national average wage declared to the CASS (Social Security Fund) the previous year. This rate can be adjusted according to the declared net income and the turnover of the business.

If the affiliation only concerns the general branch, the contribution is reduced to 10% of the same reference income.

Do you need a work permit to work in Andorra?

Yes. Any foreigner wishing to work in Andorra must have a valid work permit , issued by the Ministry of the Interior . Once hired by an Andorran company, the company will submit the official permit application on behalf of the employee.

The granting of the permit is subject to:

• the availability of government-established quotas ,

• the economic situation of the sector of activity ,

• and the company's compliance with the CASS.

Why is this system advantageous?

The Andorran social system stands out for its simplicity , transparency , and competitive social security contributions compared to most European countries. It allows businesses to control their costs while guaranteeing comprehensive social protection for their employees.

List of the main organizations of the Principality of Andorra:

- The Chamber of Commerce, Industry and Services of Andorra

https://www.ccis.ad

- Immigration:

www.immigracio.ad

- CASS (Andorran Social Security)

www.cass.ad

- Govern of Andorra

https://www.govern.ad/ca/inici

- Taxes

https://www.govern.ad/ca/tematiques/impostos-taxes-i-duana

- Official Bulletin of the Principality of Andorra:

https://www.bopa.ad