Andorra Limited Liability Company Formation

Andorra Limited Liability Company (SL) Formation

Andorra has gone through numerous changes for the last few years in order to abandon the status of “tax heaven” and to become a transparent and modern economy and a well-reputed low tax jurisdiction.

Timeframe: up to 3 months


Minimum paid up capital: EUR 3,000


Accounting and audit: starting from 5,500 EUR + 4,5% VAT *

*Depending on the number of transactions the company executes each month/year.

 

Overview

Andorra is a microstate located in Europe and bordered by Spain and France, which jointly protect the state, allowing it to enjoy many privileges available exclusively to the member states of the European Union without actually being a part of it. Such benefits include being treated as an EU member state for trade in manufactured goods and having a monetary agreement with the EU, which allows Andorra to issue euro coins and to make the euro its official currency. Since the major reform of the Foreign Investment Law has been implemented in 2012, foreign investors are now allowed to fully own a local company.

However, there is a requirement for a preliminary approval by the Andorran Ministry of the Economy if there are any non-resident shareholdings of 10% or more of the company’s capital. It is possible to become the shareholder and director of an Andorran company without physically residing in Andorra, but then it is highly recommended to hire a local employee. To meet local and OECD substance requirements we also suggest the residence of one of the shareholders or directors in Andorra. Residency is available to company shareholders that fulfill some of the requirements. Nevertheless, the particular requirements depend mostly on the activities and the countries you are trading with.

Andorra offers attractive corporate tax rates, which are among the lowest in Europe varying from 2% to 10%, and Europe’s lowest VAT rate set at 4,5%, as well as special holding regime, and double tax agreements with most reputable European jurisdictions.

The most common forms of legal entities are a Limited Liability Company or “Societat Limitada” (SL), which is usually preferred by small and medium-sized businesses, and Anonymous Limited Liability Company or “Societat Anonima” (SA), which is meant for large businesses with multiple shareholders and minimum share capital of EUR 60000. It is important to mention that there are no publicly traded entities in Andorra due to the non-existence of a local stock exchange.

There is no offshore entity model such as in other traditional “offshore jurisdictions”. Essentially all companies independently of their trading activities, client / provider location or ownership are treated as resident companies as there is no other model. A business entity in Andorra may be a solution for you to trade internationally enjoying all the advantages that Andorra has to offer.

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Name check + + -
Company incorporation
+ + -
  • Name check and approval
  • Filling incorporation documents with the Registrar of Companies
  • A standard set of original corporate documents
  • Payment of the government fee
  • Provision of registered agent and registered address for one year
Local secretary + + -
Government fees + + -
Registered office for 1 year + + -
Delivery of original documents - + -
Apostilled documents
- + -
  • If applying for a corporate bank account, you will need to order a full set of apostilled company documents when the account is opened outside of the country of Company.
Nominee director and shareholder
- - -
  • This service is required if you do not want your name to appear in the corporate documents or in the government registry. For this purpose, we will appoint another person or entity that will act on your behalf and for your interests and benefit. Such a relationship will be legally based on Power of Attorney and Trust Declaration. Despite Power of Attorney not being publicly available, such service does not guarantee 100% confidentiality. In case of request from public authorities the information about actual beneficial owner may be disclosed.
Total amount:
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Facts & Info for Andorra Limited Liability Company (SL) Formation

Company
Services
Requirements

General information

Company structure

  • At least 2 shareholders (natural person or legal entity, no restrictions with regards to citizenship or residence, however, preliminary approval is required)
  • At least 1 director (natural person only, foreign residents are allowed)
  • If there is 1 shareholder, then the entities are called "SLU" and "SAU", where "U" stands for "unipersonal"

The general assembly of shareholders is the sovereign body in the company and passes resolutions on the most important matters in company life (amendment of bylaws, approval of yearly accounts, application of profits for the financial year, appointment and dismissal of administrators, transformation, merger, separation or liquidation of the company, etc). Resolutions are taken by majority of capital (which must mean at least one third of company capital).

The General Assembly appoints and decides on the system of normal administration for the company:

  • Sole administrator
  • Joint administrators (joint action)
  • Joint and several administrators (individual action)
  • Board of Directors (collegiate action)

In case of a single person company, the powers of the general assembly are taken on by the single partner.

Taxation

  • 10% maximum corporate tax rate
  • 2% corporate tax on profits for companies involved in activities such as international management and licensing of patents and software licenses. These 2% reduced corporate tax models are subject to some minimum requirements
  • Standard VAT rate is 4.5% 
  • Social security contributions for companies are around 15%

Confidentiality

  • Beneficial owners' details – Disclosed to the Authorities
  • Shareholders' details – Not part of public record
  • Directors' details –Not part of public record

Other benefits

  • Low-tax European jurisdiction
  • Special holding regime
  • Multiple DTA agreements
  • Ideal for international trading and financial companies
  • Special agreements with the EU and Schengen area

Accounting requirements

  • Filling Accounts and Annual Tax Return is obligatory
  • Declarations are required to be filed quarterly
  • Accounting records must be kept in Andorra for 6 years

Secretary

Not Required

Registered office

Required

Company name

  • Language: preferably Catalan or Catalan-sounding
  • Letters: From Roman alphabet
  • Cannot contain such words as : Bank, Insurance, University, etc. without being approved by relevant bodies

N.B.

  • Restricted connections for company name: name of state, national or local government.
  • Company name is restricted to be identical or similar that of an existing company.

Incorporation

  • Selection of preferable company names by the client
  • Application to reserve the company name to the Government, a certificate which lapses 6 months after issue and while valid reserve a name for the future makers of the deed of incorporation
  • Request to the government for the foreign investment authorization
  • Approval of foreign investment by the Authority
  • Public deed. To incorporate the company, the public deed of incorporation is made before an Andorran notary
  • Preparation of required due diligence
  • Initiation of incorporation process after the preferred company name is approved to be available
  • Preparation of application for bank account opening in any chosen local bank, which is mandatory under the legislation of Andorra for depositing share capital
  • Companies carrying on trading, industrial or service activity must be entered in the Registry of Trade and Industry
  • Procurement of the tax number
  • Commercial activity registration for actively trading companies
  • Social Security registration of the company
  • Apostillization pf the corporate documents once the company is registred
  • Courier delivery of the hard copies of corporate documents to the address provided by the client

In order to establish the company in Andorra, you will be required to provide the following documents:

For each Director and Shareholder

  • Certified passport copy, apostilled or legalized
  • Certified proof of residential address (e.g. recent utility bill), apostilled or legalized
  • Criminal record certificates from the country of birth and of residency, apostilled or legalized
  • Bank letter of recommendation

Optional

  • CV (of each Director and Shareholder)
  • Legal reference (of each Director and Shareholder)

*If original documents are not in English, Spanish or Catalan, the documents must be accompanied by a notarized translation.

*Additional documents may be requested by the Registrar of Companies or Bank at any point to verify specific information.