How to Set Up a Company in Andorra: Step-by-Step Guide for Foreign Investors

Setting up a company in Andorra is a structured process. To incorporate, you must first decide on the type of company then reserve a business name with the Companies Department.

If foreign shareholders hold more than 10%, government authorization for foreign investment is required. After approval, you must open a bank account to deposit share capital, draft the Articles of Association, and formalize incorporation before a notary.

This article guides you through every stage of the process of starting a company in Andorra, including requirements, costs, and timelines. It also highlights the benefits of doing business in Andorra, from its favorable tax system to its growing international appeal.

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La información contenida en este artículo es meramente orientativa. No constituye asesoramiento financiero, jurídico o fiscal, ni una recomendación o solicitud de inversión. Algunos hechos pueden haber cambiado desde el momento de su redacción.

Why Set Up a Business in Andorra?

Andorra has transformed in recent years into an attractive business hub for entrepreneurs and investors. Several factors explain why more businesses are choosing Andorra as their base:

• Low and transparent tax system – Corporate tax is capped at 10%, with reduced rates for new businesses. VAT, known locally as IGI, is just 4.5%, one of the lowest in Europe. Personal income tax is progressive but modest, with a maximum rate of 10%.
• Strategic location – Situated between France and Spain, Andorra provides access to the European market while maintaining an independent fiscal regime.
• Stable and secure environment – The country boasts political stability, a modern legal framework, and strict but reliable financial institutions.
• Open to foreign investors – Recent reforms allow 100% foreign ownership of companies, provided the necessary approvals are obtained.
• Lifestyle benefits – Entrepreneurs often choose Andorra not only for business reasons but also for its high quality of life, safe environment, and natural setting in the Pyrenees.

For those looking to expand internationally, optimize tax exposure, or establish a foothold in Europe, Andorra offers a balance of opportunity and efficiency.

How to Open a Company in Andorra

To open a business in Andorra, follow these steps:

1. Choose a company structure
2. Reserve a company name
3. Notarize the Articles of Association
4. Obtain a business license

Choose a company structure.

You can start by setting up either a Societat Limitada (S.L.) or a Societat Anònima (S.A.) in Andorra.

• An S.L. is a private limited company that requires a minimum share capital of €3,000, making it the most common choice for small to medium-sized businesses. It offers limited liability protection, meaning the shareholders’ personal assets are shielded from company debts.
• An S.A. is a joint-stock company designed for larger businesses or those seeking to raise capital from multiple shareholders. It requires a minimum share capital of €60,000, at least 25% of which must be paid up at incorporation.
• Like the S.L., an S.A. provides limited liability, but its structure is more suitable for enterprises with significant capital needs or long-term expansion plans.

For most entrepreneurs and foreign investors, the S.L. is the default choice due to its lower capital requirement, simpler structure, and suitability for trading companies, service providers, or startups.

The S.A. tends to be reserved for major projects, holding companies, or entities planning to scale internationally.

Reserve a company name in Andorra.

You must submit three preferred names to the Companies Department for approval.

The government reviews the application to ensure the names are not already in use or too similar to existing companies.

The process usually takes around 10 business days. Once approved, the name is reserved and remains valid for six months, giving you time to complete the rest of the incorporation steps.

This stage is crucial because company names in Andorra are tightly regulated. You may be required to include certain terms that reflect the nature of your business, and misleading or generic names can be rejected.

Many investors prepare several variations of their chosen name to increase the chance of quick approval.

Reserving the name is the first official step in the incorporation process. Without it, you cannot move forward with drafting the Articles of Association, opening a bank account, or applying for licenses.

For this reason, most entrepreneurs complete the name reservation as early as possible to avoid delays.

Notarize Articles of Association.

The Articles of Association are the legal foundation of your company in Andorra, and they must be signed in front of a notary as part of the incorporation process.

These documents set out the company’s structure, purpose, shareholding, management rules, and governance. They define the rights and obligations of shareholders, outline how decisions are made, and establish how profits and losses are distributed. Without formally approved Articles of Association, your company cannot be registered in the commercial register.

Once drafted, the Articles are submitted to a notary, who validates the incorporation through a public deed. This notarized deed, together with proof of share capital deposit, finalizes the legal existence of the company.

At this point, the company is officially recognized under Andorran law and entered into the commercial register, making it possible to move forward with licensing and taxation.

Obtain a business license.

To obtain a business license in Andorra, you must apply for authorization from the local municipality (Comú) where your company will operate.

This license, also known as a commercial authorization, is mandatory before you can issue invoices, hire staff, or officially trade. The application typically requires:

• Proof of company registration in the commercial register.
• Lease or ownership documents for business premises.
• Details of the company’s activities.

Processing times vary depending on the municipality and workload, but entrepreneurs should expect some administrative delay.

In some cases, additional inspections or approvals may be required, particularly if the business operates in regulated sectors such as hospitality, retail, or finance.

While the business license is one of the final steps in the incorporation process, it is essential. Without it, your company exists legally on paper but cannot yet function in practice.

Do foreigners need approval to invest in Andorra?

Yes. If non-residents own more than 10% of an Andorran company, they must obtain foreign investment authorization from the government before incorporation can proceed.

This requirement applies to both individuals and corporate shareholders who are not residents of Andorra. The approval process involves submitting a detailed application that includes:

• Identification documents for all shareholders.
• A business plan describing the company’s intended activities.
• Proof of the origin of funds used for the share capital deposit.

The government reviews these documents to ensure compliance with Andorra’s investment laws and to maintain the country’s strict anti–money laundering standards. The process can take up to 1.5 months, though well-prepared applications may be approved more quickly.

Foreign investment authorization has become a standard part of incorporation for international entrepreneurs. While it adds time to the setup process, once approval is granted, foreign investors can own 100% of the company, enjoying the same rights as local shareholders.

How do you open a bank account in Andorra?

To open a business bank account in Andorra, you must apply with a local bank and deposit the required share capital. This is about €3,000 for an S.L. or €60,000 for an S.A.

The account opening process is more rigorous than in many other countries, as Andorran banks follow strict compliance and due diligence procedures. Typically, you’ll need to provide:

• Passport and personal identification documents.
• Proof of residence or registered address.
• The company’s draft Articles of Association.
• Documentation proving the legal source of funds.

Once the account is open, the share capital must be deposited before incorporation can move forward. The bank will then issue a certificate confirming the deposit, which is required by the notary when registering the company.

Entrepreneurs should be prepared for detailed questioning from banks, especially if their business model involves cryptocurrency, fintech, or other sensitive sectors. Still, opening the account is a mandatory step and ensures that the company has a transparent financial base in Andorra.

Company Tax in Andorra

The main advantage is Andorra’s low and transparent tax system, designed to encourage investment while maintaining compliance with international standards.

• Corporate tax: fixed at 10%, with reduced rates (as low as 5%) available for qualifying new companies in their early years.
• Personal income tax: 0% on the first €24,000, 5% between €24,001 and €40,000, and 10% above that. This means most residents pay an effective rate well below 10%.
• General Indirect Tax (IGI): Andorra’s equivalent of VAT, set at just 4.5%, one of the lowest in Europe.
• Double taxation treaties: agreements with countries such as France, Spain, Portugal, and others protect businesses from paying tax twice on the same income.

This tax environment makes Andorra especially attractive for entrepreneurs looking to retain profits, reinvest in growth, or structure international operations efficiently.

How do you register for tax and social security in Andorra?

You must obtain a tax identification number (NRT) and register with the Andorran Social Security system (CASS) before your company can operate.

The NRT is issued by the Andorran tax authorities and is required for all financial and commercial activities, including invoicing clients and filing tax returns.

At the same time, companies must register with CASS, the national social security system, to cover employer and employee contributions. Even if the company has no staff beyond its directors, CASS registration is still mandatory.

These registrations ensure the company is fully integrated into Andorra’s fiscal and social framework. They also allow the company to access double taxation treaty benefits and ensure compliance with local labor and tax obligations.

Do you need a physical presence in Andorra?

Yes. To be recognized as an active company and benefit from Andorra’s tax regime, you must establish economic substance in the country.

This typically means maintaining a physical office, hiring staff locally, or ensuring that company management and decision-making occur in Andorra.

While foreign investors are not required to become residents themselves, many choose to do so for tax residency and operational convenience.

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Adam es un autor reconocido internacionalmente en temas financieros, con más de 830 millones de respuestas en Quora, un libro muy vendido en Amazon y colaborador de Forbes.