Andorra Offshore Company
How to create an offshore company in Andorra? We will explain that process in a very pragmatic way. Nothing prevents you from developing a business according to tax optimization objectives! For activities related to entrepreneurship in its most diverse forms, Andorra taxation is in fact very attractive. Did you know that you can open a company in Andorra even if you are not a resident of the Principality? Being able to optimize taxation rates up to 2% on profits is inviting! If you decide to relocate to Andorra, there are a few basic elements and rules to bear in mind.
Offshore Company Andorra: Rules
Since the new economic regulations adopted in 2012 to encourage foreign investment in the country, the possibilities for non-residents of the Principality to create or establish an offshore company in Andorra have been simplified.
Above all, Principality offers the same rights as for citizens of the country, provided that the application to create a company in the territory is approved by the Department of Foreign Investment, under the supervision of the Government.
The latter was created to invite international investment in Andorra. It defines certain requirements concerning the nature of the company’s activity in more than 200 areas of competence: trade, tourism, new technologies, education, construction, etc.
Registering Offshore Company in Andorra: Requirements
According to the legal form, if you wish to create or install an offshore company, or not, in Andorra, here are the main company types names accepted in the Principality :
- Societat Limitada (SL): limited liability company is recommended for small businesses, particularly in the field of trade and services. The only condition for registering an SL in Andorra is to obtain a statutory capital of at least €3,000. The set-up fee for the registration is flat (approximately €6,000-7,000, of which €1,800 is for the Government, and the rest to cover the costs of lawyers, notaries, and others). As for the annual state fees, you pay up to €850.
- Societat Anònima (SA): a public limited company is ideal for larger entities shared by a higher number of shareholders. The statutory capital required is €60,000.
Create Offshore Company in Andorra: Process
The necessary documents to gather for the registration procedure of a company in Andorra are the following:
- Criminal record of the country of origin of the director making the request.
- Passport of the current country of residence; if you are not an Andorran resident, a legalized copy of passport, certified by a public notary in Andorra.
- Business plan specifying strategy related to the investments, including a provisional budget and an analysis of the expected financial results.
All documents must be apostilled (valid for 3 months). Take advice from an Andorran lawyer to have all the required documents validated by the regulatory bodies.
How Long Does it Take to Set up an Offshore Company in Andorra?
Once the necessary documents have been gathered, the application for a permit to set up or create an offshore company in Andorra must be sent to the Andorran Government. This usually takes 4 weeks.
After receiving a permit issued by the Government, the opening of a temporary, Andorra offshore bank account is essential to deposit the sum corresponding to the statutory capital (€3,000 for SL and €60,000 for SA).
This capital remains blocked until the Andorra business is officially registered in the Commercial Registry. The official act of incorporation of the company is carried out approximately 1 week after receipt of the Government permit, by notarial deed. Your presence in the lawyer’s office is mandatory.
Registration with the Andorran Tax Department to obtain an NRT number confirms the definitive establishment of your offshore company in Andorra. The company is registered in one of the 7 municipalities of the Principality. After registering your activity in one of the 7 parish municipalities, the Commercial Register services will issue a permit authorizing your commercial and entrepreneurial activities.
Accounting Requirements for Offshore Entity
If you wish to create or install your offshore company in Andorra, check the main accounting rules:
- Prepare the accounting documents for the year N-1 and declare your profits 6 months before the end of the year.
- Submit to a possible audit control if two conditions are met: total assets exceeding €3,600,000; net profits exceeding €6,000,000; companies with more than 25 employees.
Remember that the corporate tax rate varies between 2% and 10% of annual earnings.
Social Security Contributions in Andorra
In Andorra, the social contribution system is relatively simple compared to other European countries. The Social Security Fund called CASS governs the rules in this area. Contributions depend on the profits made and are a maximum of 22% of the total wages recorded in the company.
6.5% are payable by the employee and 15.5% are payable by the employer to cover sickness, retirement, or family benefits. CASS reimburses 75% of all medical expenses for Andorran residents. Compared to other European legislations, the Andorran system offers many advantages to companies located in the Principality.
Is Andorra a Tax Haven?
Although the Principality is no longer on the list of tax havens, Andorra still has some serious assets to attract company founders, including a 4.5% VAT (IGI), as well as a low tax rate on individuals and companies (corporate tax capped at 10%).
Obtaining Andorran Residency
Offshore company means an organization registered abroad, i.e. in a country where the owner is not a resident. These companies are free not to carry out any economic activity in the country where they are domiciled.
In this view, Andorran managers have established new provisions to attract foreign private investors. One of the main reforms adopted recently concerns the fact that the economic rights of natural persons are acquired at the same time as the legal status of residents in the Principality. This opens, many perspectives in the development of an activity.
Andorra, ideal for the establishment of your business, but not only! You can set up an offshore company in Andorra without living or even working there, without being considered an active resident. However, many advantages are coming from adopting Andorran resident status, not only of an economic or financial nature! The living environment is splendid and many activities are offered to all members of the family: fun for the children, shopping for the moms and sports for the dads, for example!
How to obtain an Andorran residency? To familiarize yourself with the administrative formalities, we recommend our guide dedicated to the matter of residency in Andorra. Owning 20% of a company’s shares is enough. Concerning the legislation itself, the main point to remember concerns the following prerogative: any person leading an organization that owns at least 21% of the shares of a company is likely to apply for residency in the Principality.
To conclude, it is not usurped to say that the creation of an offshore company in Andorra has many advantages. Any foreign company is free to move its headquarters to the Principality and acquire Andorran status, provided that the legal requirements of the country we have just outlined are met.