Setting up a company in Andorra: the complete guide to the process, costs and taxation

An Andorran company is taxed on its profits at a rate capped at 10 %. In France, the standard rate of corporate income tax reaches 25 %. On a profit of 200 000 €, the gap amounts to 30 000 € kept each year, reinvested in the business rather than paid to the Treasury. This is the main driver behind companies relocating to Andorra.

The consumption tax, IGI (impost general indirecte, the local equivalent of VAT), stands at 4,5 %, versus 20 % in France. A business invoicing services from Andorra therefore applies a rate four times lower, which lightens the final cost for its clients and simplifies its administration.

Dividend distribution follows the same measured logic. Dividends paid by an Andorran company to a shareholder who is a tax resident of the Principality are not subject to Andorran withholding tax. A director who structures their remuneration between salary and dividends therefore has room to manoeuvre that the French system no longer offers.

The company, a gateway to active residence

Creating and running an Andorran company opens access to active residence, the status reserved for those who carry on an economic activity in the country. The company is therefore not only a tax tool, it becomes the legal foundation of an entire relocation. For the detail of rates, thresholds and the France-Andorra tax treaty, see our guide to business taxation in Andorra.

When to choose the SL or the SLU. The vast majority of founders go with an SL. It is enough for a consulting firm, an agency, an e-commerce business, a trading activity or a family holding company. If you are the sole person in charge, the SLU gives you the same structure without a token partner. The 3 000 € capital stays modest and it is not lost, it then funds the running of the company.

When to choose the SA. The Societat Anònima becomes the right choice when the project mobilises significant capital, plans to open up its shareholding or targets a large-scale operation. Its 60 000 € capital and stricter formalities meet the needs of an industrial project or a company set to bring in investors.

Yes, a non-resident can own and run an Andorran company. No, they do not automatically enjoy its tax advantages. The distinction is crucial and many websites gloss over it.

Setting up the company itself remains open to non-residents. After obtaining foreign investment authorisation, a French entrepreneur based in Paris can perfectly well hold shares in an Andorran SL and manage it. On that front, nationality and place of residence block nothing.

Taxation, on the other hand, follows the person, not the company on paper. For your income to benefit from Andorran rates, you must become a tax resident of the Principality. That means living there more than 183 days a year, establishing the centre of your economic interests there and having genuine substance: an office, an actual activity, a tangible presence. An Andorran company run from France, with no real establishment, exposes its owner to reclassification by the French authorities, who will treat it as French for tax purposes.

Keep the logic in mind: the 3 000 € capital is not lost. It then funds the company’s first expenses. Your net spend, the money that leaves your pocket for good, sits between 2 500 and 3 500 € for an SL set up properly. Many providers advertise a very low headline price then add fees along the way. An honest quote includes the notary, the investment authorisation, the registration and the advisory support from the start.

Indicative amounts for a standard SL, to be confirmed according to the nature of your project and the specifics of your file. Notary and processing fees vary from one case to another.

Allow three to six months between reserving the name and opening the business bank account. This timeframe reflects going through the administration, not any slowness in the process itself.

Reserving the company name and the notarial incorporation take a few weeks. What lengthens the schedule is foreign investment authorisation, whose review depends on the government, and the bank account opening procedure, which is particularly demanding in Andorra. Andorran banks examine the source of funds and the coherence of the project before accepting a new client.

Three factors regularly extend the timeline: an incomplete investment file that goes back for review, a bank requesting additional supporting documents, and a regulated activity that requires a sector-specific authorisation. A file prepared seriously from the outset stays at the lower end, around three months.

An Andorran holding company holds stakes in other companies and centralises their dividends. Under certain conditions, the Andorran regime for holding companies eases the taxation of dividends received and of capital gains on the sale of securities. It is the tool of entrepreneurs who own several companies or who are preparing to resell a stake.

The benefit is twofold. The holding company brings a group’s governance under a single head and serves as a reinvestment vehicle, housing the cash brought up from subsidiaries before reallocating it. It remains subject to the same requirements as any Andorran company: genuine substance and effective residence of the director. A holding company with no activity and no presence brings no advantage, it creates a risk. The arrangement is decided case by case, according to your assets and your sale plans.

Creating and running a company opens the way to active residence, the status of those who work in Andorra. The company is not only a tax tool, it is the legal grounds for your relocation.

Active residence is aimed at the entrepreneur who carries on an economic activity in the Principality, most often through their own company. It requires an actual presence, an investment, and genuine management carried out from the territory. In return, it gives access to the Andorran tax regime and the right to live and work on site.

The process therefore unfolds in two linked stages: the company first, residence next, each reinforcing the other. To understand the conditions, the profiles and the supporting documents for residence, see our guide to residence in Andorra.

A single point of contact handles your company, your residence, the opening of your bank account and your relocation on site, from the first question to the first day of business. The firm is based in Andorra, it knows the notaries, the banks and the administration, and it prepares each file so that it goes through first time. You keep control of the decisions, the team handles the execution.