How to Open a Company in Andorra: Residency, Tax & Setup Guide

Societat Limitada (SL)

The SL is Andorra's equivalent of a limited liability company. It's the standard choice for most businesses. Key characteristics: minimum share capital of EUR 3,000 (must be deposited at a local bank), one or more shareholders (can be foreign), a local registered office is required, and annual accounts must be filed.

The SL is appropriate for consulting, SaaS, e-commerce, digital services, and most other business activities. It provides limited liability and a straightforward governance structure.

Empresa Individual (Sole Proprietorship)

For single-person operations, the empresa individual (autònom) is simpler. There's no minimum capital requirement, and administrative obligations are lighter. However, there's no limited liability — you're personally liable for business debts.

Most founders opt for the SL for the liability protection, even if they're the sole owner.

Active Residency (Residència Activa)

This is the standard path for entrepreneurs running a business in Andorra. Requirements include: spending at least 183 days per year in Andorra, your main economic activity must be based in Andorra, you need a local registered office and housing (purchase or rental), clean criminal record certificate (apostilled), health insurance valid in Andorra, and a minimum deposit of EUR 50,000 with the AFA (Autoritat Financera Andorrana) — this is refundable when you leave.

The residency permit is initially issued for 1 year and can be renewed for 2-year periods.

Passive Residency (Residència Passiva)

For individuals who want to reside in Andorra but don't run an active business there. This requires a significantly higher financial commitment: EUR 600,000 minimum investment in Andorran assets (real estate, government bonds, or equity in Andorran companies) plus the EUR 50,000 AFA deposit.

Passive residents can earn income from outside Andorra but cannot be employed in the country. This path is more suitable for investors and retirees.

Step 1: Company Name Reservation (Week 1)

Reserve your company name with the Andorran government (Govern d'Andorra). The name must be unique and comply with Andorran naming rules. Provide three name options. Approval takes 3–5 business days.

Step 2: Open a Bank Account and Deposit Share Capital (Week 2–4)

Open a corporate bank account with one of Andorra's five banks. You'll need to attend in person with your passport, proof of address, and a business plan. Deposit the EUR 3,000 minimum share capital plus the EUR 50,000 AFA deposit (routed through the bank).

Banking in Andorra is relationship-driven. Having a local introduction helps significantly — this is one area where working with an established partner like Vector makes a material difference.

Step 3: Notarize the Company Deed (Week 3–5)

A public notary in Andorra will prepare and notarize the company's articles of incorporation (escriptura de constitució). You must appear in person. The deed includes the company's purpose, share structure, management appointments, and registered office address.

Notary fees typically range from EUR 800–1,500.

Step 4: Register the Company (Week 4–6)

File the notarized deed with the Registre de Societats (Company Registry). Registration takes 1–2 weeks. Once registered, your SL is a legal entity and can begin operating.

Step 5: Obtain Business Authorization (Week 5–8)

Apply for the autorització d'activitat (business authorization) from the Govern d'Andorra. This involves submitting your business plan, demonstrating your qualifications, and proving that your activity meets Andorran requirements. Processing time: 4–6 weeks.

Step 6: Apply for Residency (Week 6–12+)

With the company registered and business authorized, apply for your active residency permit. Required documents include: completed application form, passport and photos, criminal record certificate (apostilled), medical certificate, proof of housing in Andorra, proof of AFA deposit, health insurance policy, and company documentation.

Residency processing typically takes 6–12 weeks. During this period, you can stay in Andorra on a tourist visa (90 days in any 180-day period for most nationalities).

Step 7: Social Security Registration (After Residency)

Once your residency is granted, register with the CASS (Caixa Andorrana de Seguretat Social) for social security. Contributions for self-employed individuals are approximately EUR 500/month, covering healthcare and pension.

Corporate Tax (Impost de Societats)

Flat rate of 10% on worldwide profits. No progressive brackets, no surcharges. Deductible expenses include salaries, rent, professional services, travel, and other ordinary business costs. Capital gains from the sale of shares in Andorran companies held for more than 10 years may be exempt.

Andorra also offers a special regime for holding companies and for income derived from intellectual property developed in Andorra (effective rate can be as low as 2%).

Personal Income Tax (IRPF)

Progressive system with a maximum rate of 10%: first EUR 24,000 is tax-free, EUR 24,001 to EUR 40,000 is taxed at 5%, and above EUR 40,000 is taxed at 10%.

Dividends received from your Andorran SL are included in personal income. However, dividends from profits that were already taxed at the corporate level may receive a credit to avoid double taxation.

IGI (General Indirect Tax)

Andorra's equivalent of VAT is the IGI, set at 4.5% — one of the lowest indirect tax rates in Europe. Reduced rates apply to certain categories: 1% for food and medical products, 0% for healthcare, education, and financial services.

No Wealth Tax, No Inheritance Tax

Andorra does not levy wealth tax. Inheritance tax between direct family members (parents, children, spouse) is 0%. For other heirs, rates are low (4–8%).

One-Time Setup Costs

Vector setup fee: from $6,900 Company registration and notary: EUR 2,000–3,500 AFA deposit: EUR 50,000 (refundable) Minimum share capital: EUR 3,000 Residency application fees: EUR 1,000–1,500 Criminal record apostille and translations: EUR 300–600

Total first-year setup: approximately $12,000–16,000 in fees plus the EUR 50,000 refundable deposit.

Annual Ongoing Costs

Registered office: EUR 1,200–3,000/year Gestoria (accounting and tax filing): EUR 2,000–4,000/year Social security (CASS): approximately EUR 6,000/year Company registry renewal: EUR 200/year Health insurance: EUR 1,200–2,400/year

Total ongoing annual costs: approximately EUR 10,000–15,000 before personal living expenses.