One of the most important strategic decisions you will make when setting up a company in Andorra is choosing the right corporate structure. Different legal forms offer different advantages and respond differently to growth, the addition of new partners and international requirements.
Among the available options, Public Limited Companies (SA) and Private Limited Companies (SL) account for the majority of foreign investment. Below, we explain the differences, advantages and limitations of each type of company, and how to decide which is the best fit for your objectives as a foreign investor.
Table of contents:
- Legal forms for setting up a company in Andorra
Comparison: Public Limited Company vs. Private Limited Company in Andorra
Reasons to set up a company in Andorra
Common tax aspects between an SA and an SL
Requirements for setting up a company in Andorra
Business, residence and taxation integration
Legal forms for setting up a company in Andorra
The Andorran legal framework recognises several different legal forms. In practice, Sociedad Anónima (SA) and Sociedad Limitada (SL) companies, and their single-member versions (SAU and SLU), account for the majority of company incorporations. Both structures offer their own legal personality and enable companies to operate in the country with full legal capacity. They also guarantee limited liability, meaning that partners/shareholders are only liable for the capital they have contributed and that their personal assets are unaffected by the company’s debts or contingencies.
Comparison: Public Limited Company vs. Private Limited Company in Andorra
One of the first key decisions when setting up a company in Andorra is choosing between a Public Limited Company (SA) and a Private Limited Company (SL). The choice between the two will depend on the expected investment volume, the type of business activity and the desired corporate structure. We outline below the most important factors to consider when deciding which legal form best suits each investor profile.
• Minimum share capital
- A Private Limited Company (SL) requires a minimum share capital of €3,000. This is an accessible option, ideal for projects that do not require substantial initial funding.
- For a Public Limited Company (SA), the minimum capital requirement is €60,000. This structure is designed for large-scale initiatives or those with multiple investment partners.
• Incorporation and maintenance costs
When setting up a company in Andorra, it is important to consider not only the share capital, but also the associated administrative and management costs:
- Private Limited Company (SL): the incorporation cost is around €1,000, including notary fees, registration procedures and other legal expenses. Annual maintenance costs are approximately €850, which covers the Companies Register.
- Public Limited Company (SA): the cost of incorporation is around €1,500, due to a more complex corporate structure and greater legal requirements. The annual maintenance fee is €950 for the same items.
• Suitability for the size and complexity of the business
- Private Limited Company (SL): this is the most suitable legal form for small or medium-sized companies – whether they are sole traders or family-owned – with localised operations. This simplified structure allows for direct management and more agile control.
- Public Limited Company (SA): designed for companies with a higher turnover, diversified activities or plans to bring in new shareholders. The ability to issue shares makes this an attractive option for raising investment or structuring holding companies.
Reasons to set up a company in Andorra
There are many reasons why the principality is attracting interest from investors who want to set up a company in Andorra:
- Competitive taxation: it offers some of the most competitive tax rates in Europe, both for businesses and individuals.
- Political and legal stability: the legislation is clear and aligned with European directives.
- Strategic location: situated between France and Spain, with major cities such as Barcelona, Toulouse and Madrid just a three-hour flight away.
- Lower operating costs than in other similar jurisdictions.
These conditions have created a dynamic business ecosystem where SMEs, technology firms and large family fortunes coexist, all of which have chosen to set up a company in Andorra to channel their international investments.
Common tax aspects between an SA and an SL
In terms of taxation, both public (SA) and private (SL) limited companies in Andorra are subject to the same tax framework. The tax burden is the same for both, so you can choose the type of company that best suits your project without affecting its tax status.
Main taxes and tax obligations:
• Corporation Tax (IS)
General rate of 10%, with the possibility of tax reductions or allowances.
• General Indirect Tax (IGI)
Equivalent to VAT, but with a lower tax rate.
The general rate is 4.5%, with reduced rates applying to specific activities, such as health, education and cultural services.
• Personal Income Tax (IRPF)
This applies to individuals who are residents and receive income, including that obtained by company directors or partners.
Tax is only payable on income above €24,000 per annum, with a graduated rate that is capped at 10%.
• Non-Resident Income Tax
This affects dividends distributed to non-resident partners and certain income obtained in Andorra.
• Local Taxes
Each company must pay municipal taxes and fees, which vary depending on the comú (municipal council) where the company is based. These include taxes on commercial, business and professional activities, taxes on rights of residence, and fees for public services such as lighting, waste collection and urban hygiene.
• Double taxation agreements
Andorra has signed agreements with several countries, including Spain, France, Portugal, Luxembourg, the United Arab Emirates and others. These treaties prevent double taxation on dividends, interest, royalties and other international income. Read our article on double taxation agreements in Andorra here.
Requirements for setting up a company in Andorra
The initial steps are similar whether you opt for an SA or an SL.
In practice, incorporation usually takes a few weeks if the documentation is submitted correctly.
- Application to the Government for a company name.
- Foreign investment authorisation: this is mandatory if a non-resident person owns more than 10% of the company’s capital.
- Opening a bank account and depositing the minimum required capital.
- Minimum capital: €60,000 for an SA and €3,000 for an SL.
- Public deed: signed before a notary with the articles of association, contributions and management structure.
- Registration in the Companies Register: necessary to obtain legal personality.
- Tax registration: to operate legally and issue invoices in the principality.
These steps are the basis for incorporating a company in Andorra in accordance with local regulations and with complete legal certainty. You can request personalised information about our services to help you set up your company in Andorra.
Business, residence and taxation integration
Setting up a company in Andorra is usually part of a broader strategy that also encompasses residence and tax optimisation. Effective planning enables the alignment of the business structure with the investor’s personal circumstances, thereby enhancing tax efficiency and ensuring legal compliance. Coordinating tax and accounting aspects with the requirements for obtaining residence is essential in order to take advantage of the benefits of the Andorran system, including double taxation agreements. Receiving comprehensive advice from the outset ensures that all elements – company, residence and taxation – are structured coherently. This not only provides legal certainty, but also enables more efficient, transparent management over the long term.
Talk to us and we’ll prepare a personalised plan for you.