Andorra


It is a diminutive European State which name denotes “waste plot of land”. The principality of Andorra was established in 805. In 1934 the Russian emigrant declared himself the King of Andorra, Boris the First, but soon he was arrested. The first government of the State was established in 1982. The first Constitution was adopted in 1993. The Principality of Andorra is a constitutional monarchy and there are two co-princes, the Catalan Bishop of Urgell and the President of France. Andorra is not the member of the European Union, but the member of the Council of Europe and the United Nations. Euro was adopted in 2002. Mostly because of its banking facilities Andorra has become a prosperous international commercial center.

Service packages

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Service item Express Standard Optimum
Company registration
Legal address per year
Secretarial services for the first year
Fees and duties for the first year
Apostilled bound set of incorporation documents
Compliance fee
Nominee service per year
Bank Account Pre-approval
Price

13 850 USD

13 850 USD

14 350 USD

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Core Services

11 500 EUR

— Incorporation

including incorporation tax, state registry fee, including Compliance fee

including

— Annual government fees

Stamp Duty and Companies Register incorporation fee

6 550 EUR

— Corporate legal services

including registered address and registered agent, NOT including Compliance fee

125 EUR

—Delivery of documents by courier mail

DHL or TNT, at cost of a Courier Service

Optional services

Nominee Director

Paid-up “nominee director” set includes the following documents

Nominee Shareholder

Paid-up “nominee shareholder” set includes the following documents

Related services

Tax Certificate

Company’s tax residence certificate for access to double tax treaties network

Certificate of Good Standing

Document issued by a state agency in some countries (Registrar of companies) to confirm a current status of a body corporate. A company with such certificate is proved to be active and operating.

Compliance fee

Compliance fee is payable in the cases of: renewal of a company, liquidation of a company, transfer out of a company, issue of a power of attorney to a new attorney, change of director / shareholder / BO (except the change to a nominee director / shareholder)

250 EUR

Basic

simple company structure with only 1 physical person

50 EUR

For legal entity in structure under GSL administration

additional compliance fee for legal entity in structure under GSL administration (per 1 entity)

100 EUR

For legal entity in structure not under GSL administration

additional compliance fee for legal entity in structure NOT under GSL administration (per 1 entity)

350 EUR

For client with high risk Status

Cost of incorporation, including first year servicing 13850
Cost of annual service, starting from the second year 7890
Open account in 27606
Incorporation timescale for a turnkey company 2 months
Country 27288

General information shortly

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Total area Population Capital Unemployment Corruption perceptions index rank
468 sq. km 77 142 (2019) Andorra la Vella 3.7% (2017) no data
Location Southwestern Europe, between France and Spain
National currency Euro
Conditional reduction of currency EUR
Against USD 0,82
Climate, average max and min t° temperate, mountain, softned by The Mediterranean sea; avg. temperaturein December - January is from -2°C to + 2°C, in June-July - from +15°C to +22°C
Time difference from Moscow - 3 hours
Dialing code +376
State language Catalan
Ethnic groups Spanish 43%, Andorran 33%, Portuguese 11%, French 7%, other 6%
Literacy rate 100%
Credit rating BBB+
Government type Parliamentary democracy
Executive branch The Prime Minister of Andorra (the head of the Government) forms Executive Council (cabinet) of nine ministers
Legislative branch The general Council (Andorran Parliament) is a unicameral legislative body of 28 members, elected by popular vote for a four-year term
Judicial branch Supreme Court of Andorra, Constitutional Court, The District Court (tries major offences), The Magistracy (tries civil, administrative and criminal cases in the first instance)
GDP per capita rank 3,154 USD (2019)

Corporate info

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Shelf companies permitted Legal system Incorporation timescale for a turnkey company Cyrillic alphabet permitted in company name Local registered office
No based upon the French and Spanish civil law 2 months No Yes
Types of entity Societat Limitadad (SL); Societat Anonima (SA)
Incorporation timescale for a new company 1 month
Company suffix S.L.
Sensitive words generic words
Local registered agent Yes
Information to be kept at the registered office accounting records, ownership information, information about the directors of the company
Seal required, type of seal not required
Redomiciliation (to, from) permitted to Andorra - yes; out of Andorra - no

Director and secretary

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Minimum number of directors Residency requirements for directors Corporate directors permitted Disclosure to local agent Disclosure to public
1 Yes Yes Yes Yes
Directors’ meetings/frequency/location Yes / annually
Company secretary required No
Residency requirements for a secretary No
Qualified secretary required No
Corporate secretary permitted No

Shareholder and beneficiary

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Minimum number of shareholders Residency requirements for shareholders Corporate shareholder permitted Disclosure to local agent Disclosure to public
2 No Yes No No
Meetings/frequency/location Yes / annually
Beneficiary info disclosure to No

Shares and share capital

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Minimum authorized share capital Minimum issued share capital Minimum paid share capital Authorized capital payment deadlines Bearer shares permitted
3000 No requirements 3000 Upon incorporation No
Issued capital payment deadlines No requirements
Standard currency Euro
Standard authorized share capital 3000
Standard par value of shares 1
Shares with no par value permitted No

Taxes

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Min. rate for corporate tax Capital gains tax VAT Withholding tax Exchange control
10% Regular rate 4.5% 0%/5%/10% No
Personal tax 0-10%
Corporate tax (in detail) Corporate tax is paid at the rate of 10%.
Capital gains tax. Details Capital gains are included in the general tax base.
VAT. Details The standard rate is 4,5%; reduced rates are1% and 0% for some particular products; 9,5% for bank services.
Other taxes social contributions, real estate tax, real estate transfer tax

Accounts

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Requirement to file accounts Publicly accessible accounts Audit required Requirement to file Annual Return Publicly accessible Annual Return
Yes No No Yes No
Requirement to prepare accounts Yes
Double tax treaties network 7
Tax Exchange Information Agreement network 24
OECD member No
Offshore/onshore status according to the RF laws Yes

GENERAL INFORMATION

General

The Principality of Andorra is one of the smallest states in Europe, situated high in the Pyrenees Mountains between the French and Spanish borders.
Andorra is not the member of the European Union, euro has been adopted in 2002. Andorra is the member of the Council of Europe and the United Nations.
Andorra is divided into 7 parishes (communes); Andorra la Vella, Canillo, Encamp, Escaldes-Engordany, La Massana, Ordino, Sant Julia de Loria. Each commune act through it’s council.

History

It is a diminutive European State which name denotes “waste plot of land”. The principality of Andorra was established in 805. For 715 years, from 1278 to 1993, Andorrans lived under a unique co-principality, ruled by leaders of France (French leaders changed a lot as the regimes in France changed quite frequently) and Spain (Catalan Bishop of Urgell).
In 1934 the Russian emigrant declared himself the King of Andorra, Boris the First, but soon he was arrested.
The first government of the State was established in 1982. The first Constitution was adopted in 1993.

Government

The Principality of Andorra is now a parliamentary democracy and there are two co-princes, the Catalan Bishop of Urgell and the President of France.
The Prime Minister of Andorra (the head of the government) is elected by the General Council of the Valleys (cat. Consell General de las Valls) and formally appointed by the coprinces for a four-year term.
The general Council (Andorran Parliament) is a unicameral legislative body of 28 members, elected by popular vote for a four-year term.
The head of the government forms Executive Council (cabinet) of nine ministers.
Judicial system consists of:
  • Constitutional Court (cat. Tribunal Constitucional) consists of 4 magistrates (interprets constitution)
  • Supreme Court, cat.Tribunal Superior de la Justicia d'Andorra (made of civil, criminal, and administrative chambers)
  • The District Court (cat. Tribunal de Corts) which tries major offences
  • The Magistracy (cat. Batllia) tries civil, administrative and criminal cases in the first instance.

Economy

In the late 20th century, Andorra became a popular tourist destination (80% of GDP). An estimated 10 million people visit Andorra each year. Tourists like the organization of winter sports (mostly alpine skiing), summer mountain climate, and duty free goods.
Agricultural production is limited by the lack of arable land.
Mostly because of its banking facilities Andorra has become a prosperous international commercial center; low taxes, and few customs duties are also the reason.
But international financial crisis has required Andorra to change some rules in economic policies; Andorran company are subject to taxation on its world wide income from 2014.

GENERAL CORPORATE INFORMATION

Law System

Mixed legal system of civil (Roman) and customary law. Civil code is based on the French and Spanish civil codes.
Treaties and international agreements prevail over domestic legislation and come into force after publishing in the Official Gazette.

Types of Business Entities

According to the provisions of The Companies Act (2007) in Andorra there are:
  • public limited company, cat. Societat anonima – SA. The capital is divided into shares, minimum capital is EUR 60 000
  • private limited company, cat. Societat de responsabilitat limitada – SL. The capital is divided into participations, minimum capital is EUR 3000. At least two shareholders are required for SL.

There are new definitions:
  • international operating company of intangible assets
  • company with participation in international trade
  • management and financial investment company
  • holding.

There are different tax privileges for different types of companies; annual fee also depends on the type of the company.

Incorporation Procedure

The application for permission to incorporate the company has to include:
  • the Memorandum of Association (notarized)
  • proposed articles of association
  • the list of founding members
  • the identity of all the company officers.

After receiving government permission to incorporate the company, the company may be registered with the Companies Register. The name of the company will have local protection.
For to be registered the whole public deed has to be adduced, as well as information about the number and value of shares or participations of each member, company’s officers (directors).
After being registered, the company:
  • has to obtain NRT (Tax Registration Number)
  • has to apply to the Register of Commerce in the appropriate commune for a trading license or special permission for actual trading or other tangible activity
  • has to get an approval from government (ones more..) concerning opening the business.

It’s important to mention, that change of ownership in the company and any change to the officers of the company has to be authorized by an Andorran notary and then registered with the Companies Register.
Andorra registrates foreign investment in The Foreign Investment Register (so application for approval of foreign investment should be made in the very beginning of the registration process).

Limitation of Activity and Bank account

Till recently, Andorran company couldn’t have been incorporated in interests of foreign person only: shareholder (participant) who is Andorran citizen was required. Now (since 2012) it is possible for foreigners to hold 100% of a company in more than 200 economic sectors.
Investors, bоth individuals and companies, must open an Andorran bank account. So Andorran banks will examine documents concerning the investment and the company.

Registered Office

It is obligatory to have the office of the company in Andorra, so the register also has to be kept within Andorra.
The service is provided by local agents.

Seal

No special requirements.

Prolongation

The service is supplied by local agent.

Redomiciliation

Andorra is ready to accept companies from other jurisdictions; redomiciliation out of Andorra is prohibited.

COMPANY STRUCTURE

Directors

Minimum number is 1 person (both natural and legal person are permitted).
It is recommended for fiscal reasons that the director of Andorran company should be the resident of Andorra.

Secretary

Company secretary is not required.

Shareholders

Minimum number of shareholders in Andorran company is two. Restrictions concerning obligatory participation of Andorra resident in Andorra’s company were removed, since new foreign investing act had been adopted in July of 2012.

Beneficiary

Nominee ownership does not exist. The fine is up to EUR 600, and can be doubled if the infraction is repeated.
Register of the company, held in office in Andorra, has to contain the identity and the address of each member, property rights and charges related to.
The change of ownership and officers of the company has to be registered in Company Register.
However, Andorran law does not provide any sanctions for breaking the rules concerning maintenance of ownership information. Moreover no competent authority can access ownership information which is held by the entities, except ownership information held by financial institutions.

State Capital and Shares

The minimum amount of share capital for a limited company in Andorra is EUR 3,000. The share capital must be fully paid up in advance of incorporation. This amount must be deposited with an Andorran bank in a designated company incorporation type account. The bank must then release a special certificate, addressed to the designated notary, responsible for concluding incorporation formalities.
Bearer shares are not allowed. Andorran legislation requires that all shares must be nominal shares. But still (as bearer shares were allowed before 1983) there are some companies in Andorra, shares of which have not been transferred.

TAXATION

Personal Tax

Personal income tax is paid at the following rates:
  • 0% on income up to EUR 24,000
  • 5% on income from EUR 24,001 to 40,000
  • 10% on income over EUR 40,000.

Capital gains are generally taxed at the rate of 10%.
Capital gains are included in the general tax base. Profits from the sale of real estate are taxed at rates ranging from 1% to 15% depending on the ownership period before the sale, with tax exemption for real estate owned for more than 10 years.

Corporate Tax

Resident companies pay tax on their worldwide income, nonresident ones on income from sources in Andorra.
Corporate tax rate is 10%.
Dividends received can be exempt from taxation if a number of conditions are met.
Capital gains are included in the general tax base.
Profits from the sale of real estate are taxed at rates ranging from 1% to 15% depending on the ownership period before the sale, with tax exemption for real estate owned for more than 10 years.
Gains from the sale of real estate are also included in the corporate tax base, with a credit of real estate sale tax.
Holding companies that own shares in foreign companies may, under certain conditions, be exempt from corporate tax on dividends received and profits from the sale of shares.

VAT

The standard VAT rate is 4.5%.
For some goods and services, the rates are 2.5%, 1% and 0%, and for banking and financial services – 9.5%.

Tax at source

When paying dividends and interest to non-residents, no taxes are levied at the source of payment.
When paying royalties, the tax is 5%.
When paying for technical services, the tax is withheld at a rate of 10%.

Social contributions

Employers must pay social contributions on employee benefits at a rate of 14.5%, employees at a rate of 5.5%.

Property Tax

Local real estate taxes are payable based on the size of the real estate.

Property Transfer Tax

When transferring real estate, tax is usually paid at the rates from 1.75% to 2.5%.

Avoiding International Double Taxation

Double Tax Agreements

The Andorra has exchange of information relationships with 27 jurisdictions through:
  • 6 DTC: Liechtenstein, Luxembourg, Malta, Portugal, Spain, United Arab Emirates.
  • 24 TIEA: Argentina, Australia, Austria, Belgium, Czech Republic, Denmark, Faroe Islands, Finland, France, Germany, Greenland, Iceland, Italy,
  • Korea (Republic of), Liechtenstein, Monaco, Netherlands, Norway, Poland, Portugal, San Marino, Spain, Sweden, Switzerland.

Exchange Control

There is no exchange control in the country.

ACCOUNTING

Annual Return

An annual report, including annual accounts, has to be filed to the Companies Register.

Financial Statements

Accounting records include:
  • balance sheet
  • profit and loss account
  • statements of income, asset and cash flow.

Also the company should keep the proposed distribution of profits.
Accounting records should be kept in the company’s office in Andorra.
Auditing is obligatory in situation when during two years:
  • total assets exceed EUR 3,600,000
  • net sales exceed EUR 6,000,000
  • the company has more than 25 employees.

Tax Returns

The tax period coincides with the company's financial year.
The tax return is filed and the tax is payable within 6 months and 30 days of the end of the financial year.
The provisional tax is also payable in September each year.

COMPANIES WITH SPECIAL PERSONALITY

Trusts

There is no special legislation concerning trusts in Andorra, so there are no tax obligations. Also there are no rules in Andorran legislation, forbidding trustee relationship, so Andorran resident can be trustee or administrator of a foreign trust.
Fiduciary obligations (obligations, a person exercising professional activity assumes according to trustee relationship) are applicable.
According to the rules of AML Act concerning foreign trust 25% control over the assets of the trust by individual or individuals is required, for the information about the customer (beneficial owner of the transaction) would have to be identified by the regulated entities.
Concerning taxes – an Andorran trustee will have to pay taxes and prepare accounting information as a person, doing his own business.

Foundations

A legal non-profit entity in Andorran law, all assets of which are attached to the fulfillment of the foundation’s purposes.
Minimum of assets – EUR 100,000.
Types:
  • public foundation (50% of the assets come from public entity, and at least one third of these assets come from Andorran public entity)
  • private foundation (also public interest purpose, but no requirements to founders).

Foundations are supervised by a Foundation Protectorate which is operated by the Ministry of Justice.
The registration process is more or less the same the companies’ registration procedure.
First of all private foundation has to appeal to the Government with the draft deed; the contribution to the public interest should be justified. After obtaining Government’s authorization the formation deed should be send to the Foundation Register.
Foundations are governed by the Foundation Council which consists of at least 3 members (Andorran citizens or foreigners legally resident in Andorra) and the President of the Foundation Council (Andorran citizen).
The registered office of a foundation has to be in Andorra, where accounting records should be available.
The foundation’s annual financial statements have to be approved by the Foundation Council and to be audited by an external auditor in case annual total value of assets exceeds EUR 1 million or total amount of ordinary annual income exceeds EUR 500,000 or both these conditions. The audit report has to be submitted to the Protectorate.

International law relations

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Party to the Hague Convention (Apostille) Legal system Double tax treaties network OECD member Offshore/onshore status according to the RF laws
Yes based upon the French and Spanish civil law 7 No Yes

Public authorities and legal acts

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List of laws and regulations
Act name Scope of law
Trademark Law trademarks
Patent Law patents
Tax treaties entered France, Liechtenstein, Luxembourg, Malta, Portugal, Spain, United Arab Emirates
Tax Exchange Information Agreement (TEIA) Argentina, Australia, Austria, Belgium, Czech Republic, Denmark, Faroe Islands, Finland, France, Germany, Greenland, Iceland, Italy, Korea (Republic of), Liechtenstein, Monaco, Netherlands, Norway, Poland, Portugal, San Marino, Spain, Sweden, Switzerland
List of state regulatory authorities
Andorra Government http://www.govern.ad/
General Council \ Parliament http://www.consellgeneral.ad
Ministry of Finance \ Access to accounting information of the companies and foundations http://www.mae.ad
Ministry of Foreign Affairs http://www.exteriors.ad/en/
Trademark Registry http://www.ompa.ad/en/

    Legal Partner of Review:

    Aleix Advocats & BP Economistes

    The Andorran law firm, Aleix Lawyers, located in the centre of Andorra la Vella, the capital of the Principality, consists of dynamic, multilingual lawyers, who are members of the Andorran Bar Association, here to provide personalised help and guidance. In addition to the legal services provided by the lawyers in the Aleix law firm, the tax specialists and consultants in BP Economists offer their services regarding tax advice, audits and accounts.

    Andorra Company Formation

    Consultants

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    Regards, GSL Law & Consulting Lawyer, Head of UK GSL office Aniko Sebok

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    GSL Law & Consulting Lawyer, London Office

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