Company Formation in Andorra: How to Set Up a Business, Taxes & Authorisation Process

Company formation Andorra is now one of the most searched routes for entrepreneurs, investors and small and medium-sized enterprises looking to establish a low-tax, fully compliant European base. This guide explains, in practical detail, how to set up a company in Andorra: the step-by-step process, realistic timelines (widely reported at 10–14 weeks where a foreign-investment authorisation is required), the corporate tax framework (a headline rate of up to roughly 10%), the main company types, and the 2026 emphasis on transparency and economic substance. It is written for foreign founders and non-resident investors who want a clear, authoritative overview before engaging local counsel.

Andorra sits between France and Spain and has, over the past decade, transformed itself from an opaque micro-state into a cooperative jurisdiction that participates in international exchange-of-information frameworks overseen by the Organisation for Economic Co-operation and Development (OECD). The 2026 update highlighted throughout this page is the continued tightening of foreign-investment authorisation and substance documentation. Understanding these requirements early is the difference between a smooth incorporation and months of avoidable delay. Below you will find the process, a comparison table, tax treatment, authorisation guidance, banking and residency notes, and a full FAQ.

Quick facts: At-a-glance

• Typical formation time: Around 10–14 weeks where a prior foreign-investment authorisation is needed, plus name reservation, notary and registry steps that can run partly in parallel, per guidance from the Govern d’Andorra.
• Corporate tax headline: A general corporate tax rate of up to approximately 10%, with reduced regimes available in defined cases, per the Andorran tax authority.
• Common company forms: Societat Limitada (SL), Societat Limitada Unipersonal (SLU) and Societat Anònima (SA).
• Minimum capital ranges: Lower thresholds for the SL/SLU and a higher threshold for the SA, as set out in Andorran company law via the Consell General.
• Foreign ownership: Up to 100% foreign ownership is generally permitted subject to prior authorisation.
• Residency: Founders often combine incorporation with an active or passive residence permit, though residency is not compulsory for every structure.

How to set up a company in Andorra, step-by-step process

The most common question, how do I set up a company in Andorra?, is best answered as a sequence of defined stages. Below is the practical, ordered process that most foreign founders follow, with realistic timing at each step.

Step 1, Pre-check and business plan

Before anything is filed, verify that your proposed activity is permitted and identify whether it touches a regulated sector (for example finance, insurance or certain professional services), which carry additional supervision. Confirm whether your investment triggers the foreign-investment review that applies to non-resident participation. Prepare a concise business plan, describe the economic activity, and gather identity documents for every shareholder and director. This preparatory diligence shapes both the authorisation dossier and the later banking KYC file, so getting it right at the outset saves weeks of rework and is central to successful company formation Andorra projects.

Step 2, Foreign-investment authorisation (if applicable)

Where an investor is a non-resident, Andorran law generally requires a prior foreign-investment authorisation before the company can be incorporated, administered by the Govern d’Andorra. The 2026 documentation checklist has become more demanding: applicants should expect to submit proof of identity, a description of the intended economic activity and its benefit to Andorra, source-of-funds evidence, and, increasingly, indications of intended substance. The reported average timeframe is 10–14 weeks, though straightforward files can be quicker. Provisional or conditional approvals are possible, sometimes tied to commitments on activity or local presence. For a deeper walkthrough, see our planned guide on foreign-investment authorisation in Andorra explained. Because this step gates the whole timeline, begin it as early as possible.

Step 3, Reservation of company name and notary deed

Once authorisation is granted (or where none is required), the next stage in andorra company registration is reserving the company name to confirm it is available and compliant. The incorporation is then formalised in a public deed executed before an Andorran notary. The notary verifies the identity and capacity of the parties, the articles of association and the authorisation reference. Foreign documents typically require sworn translation into Catalan and, where executed abroad, apostille or equivalent legalisation. Powers of attorney are frequently used so founders need not attend in person for every signature.

Step 4, Capital deposit and bank account

The minimum share capital depends on the company type, a lower threshold for the SL/SLU and a higher one for the SA. Capital must be deposited and evidence of the deposit obtained, which the notary and registry require. Opening the corporate bank account triggers the bank’s own anti-money-laundering and know-your-customer checks supervised in line with guidance from the Autoritat Financera Andorrana (AFA). These checks interact with the authorisation: banks scrutinise source of funds and economic rationale, so consistency across your authorisation dossier and banking file is essential.

Step 5, Registration with the Commercial Register

With the notarised deed and proof of capital in hand, the company is entered in the Andorran Commercial Register (Registre de Societats). The filing records the company’s directors and shareholders, its registered office, articles and capital. On acceptance, the register issues the registration number and certificate that give the company legal personality and allow it to contract, invoice and operate. This is the milestone that converts a project into a live legal entity, and it is the formal core of any company formation Andorra engagement.

Step 6, Tax ID, social security and licences

The newly registered company must register with the Andorran tax authority for corporate tax and, where relevant, for indirect tax, per the Ministry of Finance / tax authority. Employers enrol in the social-security system for staff, and any municipal (comú) business permit for the physical premises must be obtained. These registrations are prerequisites to lawful trading and payroll.

Step 7, Post-registration compliance and opening for business

Finally, set up accounting records, payroll and any required licences, and take concrete substance steps such as securing premises and local activity. Diarise annual filings and tax deadlines so the company remains in good standing from day one.

Comparison table: requirements, costs and timelines for company formation Andorra

The table below compares the principal vehicles used in company formation Andorra so founders can see, at a glance, how capital, governance, timing, cost and ongoing burden differ. Figures for capital and governance reflect Andorran company law; timelines assume a non-resident investor requiring authorisation unless stated.

In practice, most trading and holding businesses choose the SL or SLU for its flexibility and lower capital. The SA suits larger ventures or those needing negotiable shares. A branch fits an established foreign group extending into Andorra, while a representative office is limited to non-commercial liaison. For a fuller breakdown, see our planned company types and minimum capital in Andorra resource, and read the andorra company registration checklist and timeline before you file.

Company types and capital requirements

Andorra offers a compact but effective menu of corporate vehicles, and choosing the right one is central to any well-planned company formation Andorra strategy. The rules that follow derive from Andorran company law enacted through the Consell General and administered by the Registre de Societats.

• SL (Societat Limitada): The limited-liability company is the workhorse of the Andorran economy. It suits trading businesses and SMEs, carries a lower minimum capital, and allows one or more shareholders whose liability is capped at their contribution.
• SLU (Societat Limitada Unipersonal): A single-member version of the SL, ideal for solo founders or wholly owned subsidiaries. Governance is streamlined but the same accounting and tax duties apply.
• SA (Societat Anònima): The public-limited-company equivalent, with a higher minimum capital and more formal governance. It is preferred where shares must be freely transferable or where the venture is capital-intensive.
• Branch and representative office: A branch is a dependent extension of a foreign parent that can trade locally; a representative office is confined to promotional or liaison work and cannot carry on commercial operations.

Shareholder numbers, director appointments and governance formalities scale with the vehicle. While a resident director is not universally mandated across every structure, a genuine registered office and local presence are increasingly expected as part of substance. The SL and SLU are also popular as an andorra holding company platform because they combine limited liability with an attractive tax profile; the interaction with dividends and participation relief is discussed in the tax section below. Founders comparing SL vs SLU vs SA should weigh capital, transferability, governance and the intended scale of the business.

Corporate tax, withholding and incentives

The andorra corporate tax regime is a principal driver of interest in company formation Andorra. The headline general corporate tax rate is up to approximately 10%, as published by the Andorran tax authority (Ministry of Finance). Reduced treatment can apply in defined circumstances, and newly established undertakings have historically benefited from transitional relief in early years, always confirm current parameters with the tax authority as these are periodically revised.

Withholding tax rules on outbound dividends, interest and royalties depend on the recipient and any applicable double-tax treaty; Andorra has expanded its treaty network as part of its move toward international cooperation. Indirect taxation is levied through the general indirect tax (IGI), whose standard rate is modest relative to EU VAT rates and which applies to most supplies of goods and services. Holding structures can benefit from participation-based relief on qualifying dividends and gains, which, combined with the low headline rate, makes an andorra holding company a competitive option for regional groups, subject to substance.

For a typical small or medium trading business, the effective corporate tax burden generally sits at or below the 10% headline, and can be lower after allowable deductions. That said, low nominal rates are only part of the picture: substance, transfer pricing and correct classification of income all affect the real outcome. A detailed comparison of company and founder-level taxation will appear in our planned corporate tax and resident tax comparison for Andorra.

Is Andorra still a tax haven? No, the label is outdated. Andorra has committed to automatic exchange of financial-account information and aligns with transparency and anti-base-erosion standards promoted by the OECD. It is best described as a low-tax, cooperative jurisdiction rather than a secrecy haven. The low rate is real, but it comes with transparency obligations and genuine substance expectations.

Foreign-investment authorisation, 2026 update

The foreign investment authorisation Andorra requires is the single most important planning item for non-resident founders, and 2026 has sharpened its requirements. Under the framework administered by the Govern d’Andorra, non-resident investors generally need prior authorisation before acquiring a participation in, or forming, an Andorran company. The regime is designed to permit foreign capital, often up to 100% ownership, while allowing the state to review the economic rationale and integrity of the investment.

The 2026 documentation expectations lean heavily on transparency and substance. Applicants should be ready to demonstrate the intended economic activity and its benefit to Andorra, provide robust source-of-funds evidence, and indicate how the business will maintain a real local presence rather than a nameplate. Compliance and integrity checks on the investors are part of the assessment.

Timelines: The reported average is 10–14 weeks for authorisation. Some steps, such as preparing the notarial file or beginning bank onboarding, can advance in parallel, but incorporation itself cannot complete before authorisation is granted. Building the timeline around this dependency is the key to avoiding surprises.

A practical authorisation checklist typically includes:

• Identity documents: Passports or national IDs for each investor and director, often apostilled.
• Corporate plan: A clear description of the activity, market and expected economic contribution.
• Source-of-funds evidence: Bank statements or documentation showing the origin of the invested capital.
• Translations and legalisation: Sworn Catalan translations and apostilles for foreign-issued documents.
• Local address / registered agent: A registered office in Andorra and, where used, an appointed local representative.

Authorisations may carry conditions or limitations, and refusals can, in principle, be challenged through the applicable administrative appeal routes. Because requirements evolve, verify the current dossier with counsel before filing. For a step-by-step walkthrough, see our foreign-investment authorisation in Andorra explained resource.

Key requirements, eligibility and substance rules

Beyond authorisation, several standing requirements govern eligibility and ongoing legitimacy. A genuine registered office in Andorra is expected for every company, and while director-residency rules vary by structure and activity, regulators increasingly look for a real management footprint. Minimum share capital must be deposited and evidenced according to the chosen vehicle, consistent with the company-law thresholds enforced by the Registre de Societats.

Economic substance is now central. Authorities and banks alike want to see indicators such as local staff or a local manager, physical premises appropriate to the activity, and demonstrable business operations rather than a passive shell. Anti-money-laundering and counter-terrorist-financing obligations, supervised in line with AFA guidance, require identification and verification of clients and counterparties, and beneficial-ownership information must be disclosed and kept current.

Non-compliance carries real consequences. Failure to meet substance, reporting or AML obligations can lead to penalties, and in serious cases an authorisation or registration may be revisited or revoked. Treating substance and compliance as design features from the outset, not afterthoughts, protects the investment and keeps the company formation Andorra project durable over the long term.

Banking, accounting and payroll in Andorra

Opening a corporate bank account is often the step where timelines slip, so plan for it. Andorran banks apply thorough KYC and AML procedures aligned with AFA supervision. Expect requests for the corporate documents, identification of directors and beneficial owners, the business plan, and detailed source-of-funds and economic-substance explanations. Consistency between your authorisation dossier and your banking file speeds onboarding; contradictions cause queries and delay.

On accounting, Andorran companies must keep proper books and file annual accounts, with filings prepared in the local language and to the applicable accounting standards. Fiscal-year options and the audit threshold determine whether an independent audit is required, larger companies and certain structures fall within audit obligations. Payroll enrolment through the social-security system is mandatory once staff are hired, and employer contributions must be administered correctly.

Typical service providers include the Andorran banks for accounts and local accountants or gestories for bookkeeping, tax filings and payroll. Budgeting for these recurring services, alongside the one-off formation cost, gives a realistic view of the total cost of operating. Our planned banking, accounting and payroll services in Andorra guide covers vendor selection and onboarding in more depth.

Residency routes for founders and key personnel

Many founders pair incorporation with a residence permit, and understanding andorra business residency options helps you sequence the two. Broadly, there are active residence permits linked to running a business and holding a management role in the Andorran company, and passive residence permits aimed at investors who do not actively work in Andorra but meet investment and presence thresholds. Eligibility, minimum stay and financial requirements differ between routes, and the choice interacts with how you structure the company and its management.

Can a US citizen move to Andorra? Yes. Andorra’s residency routes are open to nationals of many countries, including US citizens, subject to meeting the relevant permit conditions such as investment, activity and background checks. Nationality itself is rarely the obstacle; satisfying the substantive requirements is. Because immigration rules change and personal circumstances matter, confirm the current conditions with counsel. A dedicated residency routes for founders resource is planned to cover documentation and timelines in detail.

Compliance, reporting and penalties

An Andorran company’s obligations continue well beyond incorporation. Annual accounts must be prepared and filed, corporate tax returns submitted by the applicable deadlines per the tax authority, and companies above the audit threshold must appoint an auditor. Where related-party dealings exist, transfer-pricing principles apply and pricing should be supportable at arm’s length. Late or inaccurate filings attract penalties, and persistent or serious breaches can escalate to enforcement, including risks to a company’s standing.

On transparency, Andorra participates in international exchange-of-information and anti-base-erosion frameworks promoted by the OECD, and beneficial-ownership data must be maintained and reported as required. Well-run companies treat compliance as an operating discipline: a compliance calendar, clean records and current beneficial-ownership information keep the business audit-ready and reputationally sound.

Conclusion and next steps

Andorra offers a compelling combination for founders: a low headline corporate tax of up to roughly 10%, flexible company vehicles, and a stable, cooperative European setting. The trade-off is that successful company formation Andorra now depends on getting foreign-investment authorisation and economic substance right from the beginning. Because authorisation typically drives the overall timeline of around 10–14 weeks, early preparation is the most valuable thing a founder can do.

Before engaging local counsel, assemble a clear document pack: certified identity documents for all shareholders and directors, a concise business plan describing the activity and its economic benefit, robust source-of-funds evidence, proposed company name options, details of your intended registered office, and any foreign documents ready for sworn Catalan translation and apostille. Having these in place lets your advisers move straight to filing rather than chasing paperwork. With the process, tax framework, authorisation requirements and compliance obligations set out above, you are well positioned to plan a compliant, tax-efficient company formation Andorra project and to move confidently through each stage from authorisation to opening for business.

Sources

• Govern d’Andorra, Official government portal
• Ministry of Finance / Andorran Tax Authority
• Registre de Societats, Andorran Commercial Register
• Consell General d’Andorra, Parliament and statutes
• Autoritat Financera Andorrana (AFA)
• Organisation for Economic Co-operation and Development (OECD), Tax transparency