Andorra Companies

General Introductory and Offshore Tax Information

Andorra may be preferably described as a low tax jurisdiction. The jurisdiction does not offer ‘offshore’ vehicles such as exempt trusts and international business companies which are ring fenced and excluded from all taxes within the offshore context of providing services only to non residents.

However, jurisdictions which levy minimal taxes or no income tax are viewed as preferential or special tax regimes and as such encourage company registration and incorporation, thus taking on the likes of an offshore shelter.

Andorra is thus commonly identified as a tax haven based on the grounds that besides domestic property taxes, customs duties and the registration fees which corporations are expected to pay, there are no income taxes while many tax incentives are available to the foreign investor.

Before the passage of the Foreign Investment Law in November 2006, foreign investors were mainly able to gain from these tax incentives by undertaking joint ventures with local residents which made it possible to maximizing on tax savings. However, this has changed since the opening up of over 200 sectors within the economy, making room for foreign and offshore business entities from around the world to do business in Andorra.

The Foreign Investment Law allows a foreigner to be the full owner of a business so long as the business activity qualifies as one of the 200 sectors identified under the act. These sectors include electronic commerce, research and development, plastic surgery, education, industrial production, audiovisual production and training.

Andorra Offshore Business Entities:

• Andorra Societat Limitadad (SL)
• Andorra Societat Anonima (S.A)
• Andorra Societat Colectiva
• Andorra Partnership
• Andorra Sole Partnership
• Andorra Branch of Foreign Company
• Andorra Audio-Visual Productions Company
• Andorra Software Companies
• Andorra Textile Company
• Andorra Manufacturing Company

Andorra Societat Limitadad (SL)

Main Features:

• The Andorra Societat Limitada is regulated by The Corporations Act 1983
• As prescribed by the Act, a Societat Limitadad may not have less than two (2) shareholders
• This corporate form is used by primarily by corporations that are engaged in domestic trade
• The minimum paid-up share capital of an SL is 6,000 Euros
• There is an annual fee to be paid as prescribed according to the Act
• The proposed company name of any SL must be approved by Registrar before use
• Organizing an Andorra Societat Limitadad follows regular incorporation procedure of filing Memorandum and Articles of Association

Andorra Societat Anonima (S.A)

Main Features:

• A Societat Anonima in Andorra is regulated by the Corporations Act 1983
• Societat Anonimas are required to have a paid-up share capital of at least 30,000 Euros
• The primary use of this business entity is to form large corporations
• An prescribed annual renewal fee is required to be paid
• An Andorra S.A undergoes stricter government checks than the Societat Limitadad
• Before its use, the proposed company name must be approved by Registrar
• Organising an S.A follows the regular incorporation procedure of filing Memorandum and Articles of Association

Andorra Societat Colectiva

Main Features:

• The Societat Colectiva is one of the main offshore business entities used in Andorra
• This company form is based on principal of sharing the company’s capital among the partners with unlimited responsibility
• Under the Corporations Act 1983 which also governs the Societat Colectiva, there is a requirement to pay an annual licence renewal fee
• To create a Societat Colectiva the Memorandum and Articles of Association must be filed with the relevant authority

Andorra Partnership

Main Features:

• Partnerships as corporate entities do not exist under Andorra law
• However, a partnership can be entered into by two (2) or more people by incorporating a civil company
• The partners will assume unlimited liability to the partnership created and this may be done either through a deed or private contract
• Partnerships formed in this manner require permission required from local commune to be able to carry out trade
• There is a prescribed pay annual licence renewal fee as required for other companies
• This Andorra business entity is often used by foreign residents to set up local businesses such as restaurants. In this arrangement an Andorran national must be appointed to hold a certain percentage (about 67%) ownership, but power of attorney is given through contract to the beneficial owner thereby transferring rights to financial and corporate management

Andorra Sole Partnership

Main Features:

• Andorran sole proprietorships may be formed by A foreigner who has lived as a sole trader in the jurisdiction for more than 10 years
• An annual license renewal fee is applicable to the sole proprietorship
• Licenses for trading purposes are issued by the Registre de Commerc

Andorra Branch of Foreign Company

Main Features:

• Branches in Andorra can only be set up by insurance companies

Andorra Audio-Visual Productions Company

Main Features:

• Audio-visual production is one of the sectors opened up in Andorra and companies are capable of providing services internationally. Audio visual companies are not restricted from offering their services internationally or enjoying minimal tax rates as other Andorran business entities

Andorra Software Companies

Main Features:

• Under the business diversification program, software companies can be organised for the purpose of providing advanced and specialized tools for businesses that offer transportation and logistical services. Software companies are not restricted from offering their services internationally or enjoying minimal tax rates as other Andorran business entities.

Andorra Textile Company

Main Features:

• With the opening up of its economic sectors, textile companies may be formed for specializing in clothing such as undergarments, sports apparel, children clothing and accessories. These corporate structures in Andorra belong to the secondary sector and opened up under the new economic reform program in Andorra. Andorra companies are not restricted from offering their services internationally or enjoying minimal tax rates as other Andorran business entities.

Andorra Manufacturing Company

Main Features:

• Andorra’s manufacturing industry is a vital part of the economy. Within this sector are beverage, graphic arts, recording and wood production companies, including entities engaged in producing and distributing gas, electrical energy and water. In 2006, there was a total of 203 manufacturing companies operation in Andorra, thanks to the Andorran business reform and diversification program.