Creating a company in Andorra with a notary: procedures, costs and key considerations

Creating a company in Andorra can be an attractive option for an entrepreneur looking to develop a business from the Principality. However, the project is not simply about taking advantage of an attractive tax system. Company incorporation, foreign investment, banking, source of funds, articles of association, taxation and, where applicable, residency all involve several procedures that need to be coordinated.

The notary plays an essential role in this process, as they are involved in the legal formalisation of the company and the authentication of its incorporation. However, their involvement does not replace a tax analysis of the project or banking and administrative checks. Before getting started, it is advisable to understand exactly what to expect, especially if you are a non-resident.

The benefits of creating a company in Andorra

Taxation is often the main reason entrepreneurs become interested in Andorra. The standard corporate income tax rate can be as high as 10%, making the Andorran tax system attractive compared with that of many European countries.

However, this figure should not be interpreted as a promise that every company will actually be taxed at 10%, nor as a guarantee of automatic tax savings. The actual tax treatment depends on the business activity, the structure chosen, the situation of the shareholders and directors, as well as any tax rules that may apply in other countries. This is particularly important for an entrepreneur who maintains economic or personal ties with France, Spain or another country. Setting up an Andorran company is not, in itself, enough to change the director's tax residence.

Andorra also offers the advantage of providing a structured legal environment and a framework designed to accommodate local economic activities and foreign investment. The country has also entered into agreements aimed, in particular, at addressing certain situations of double taxation.

Nevertheless, establishing a business in Andorra must correspond to a genuine economic reality. The place from which the company is actually managed, the activity carried out, the presence of the director and their personal circumstances can all have significant consequences. This is why personalised advice from professionals with expertise in Andorran law and taxation, and where necessary in the director's home country, remains essential.

What is the actual role of the notary?

In Andorra, the notary is not simply the person in front of whom a document is signed at the end of the process. They are involved in formalising the incorporation of the company and ensure the legal validity of the documents they authenticate. They verify the identity of the parties and the information required to sign the deed of incorporation, then give it its authentic legal form.

This intervention provides shareholders with important legal security. The articles of association determine very practical matters, including the distribution of share capital, the operation of the company's governing bodies, the powers of directors and the rules applicable between shareholders.

However, this role should be distinguished from that of a lawyer, tax adviser, accountant or banking adviser. Depending on the complexity of the project, several professionals may be required. A structure that is perfectly valid from a legal standpoint may, for example, have tax implications requiring a separate analysis. For a foreign entrepreneur, coordinating these different areas is often one of the main challenges of the project.

SL or SA: which company structure should you choose in Andorra?

The Societat Limitada, generally referred to by the abbreviation SL, is one of the forms commonly used by SMEs, service companies and many entrepreneurial projects. The minimum share capital generally associated with this structure is €3,000. Shareholders' liability is generally limited to their contributions.

The Societat Anònima, or SA, is more suited to projects requiring a larger capital structure. Its minimum share capital is generally €60,000. It may be appropriate when the project involves several investors, significant financing requirements or a more sophisticated capital structure.

However, the choice should not be based solely on the amount of capital required. It is also important to consider the number of shareholders, the desired governance structure, financing needs, the terms governing investors' entry or exit, the company's actual business activity and its long-term objectives.

The term "Andorran holding company" is also frequently used. A holding company primarily serves an economic purpose: holding shares in other companies. Its legal and tax benefits must be assessed in light of the actual circumstances of its shareholders and the companies it holds. It would be unwise to present a holding company as a tax optimisation tool suited to every investor.

This is precisely where personalised professional advice becomes particularly valuable. The right structure is not the one that appears most advantageous on paper, but the one that genuinely matches the project.

How does the process of setting up a company in Andorra work?

In practice, setting up a company begins before signing the deed before a notary. The first step is to clearly define the business activity, identify the shareholders and directors, and choose the appropriate legal structure. The name of the future company must be available and the corresponding reservation procedures must be completed.

When the project involves foreign investment, specific formalities may apply. This stage should be anticipated, as the situation of a foreign entrepreneur is not necessarily handled in the same way as that of someone already established in the Principality.

Preparing the banking file is another particularly important step. Banks need to know their customers and understand the origin of the funds being used. They may request detailed information about the shareholders, their professional background, the planned business activity, the beneficial owners and the source of the capital.

A consistent application is essential. If the business plan describes an activity unrelated to the founder's professional background, if the origin of part of the funds is not sufficiently documented, or if several documents contain conflicting information, additional checks may be required.

Once the articles of association have been prepared and the necessary preliminary formalities have been completed, the deed of incorporation can be signed before a notary. This is followed by the company's registration and the various tax, commercial or sector-specific procedures required to effectively start the business. It is preferable to view company formation as a chain of interconnected procedures rather than simply as a notarial signing.

What documents do you need to prepare?

The exact composition of the application file varies depending on the shareholders' profiles, their country of residence, the nature of the business activity and the requirements of the relevant authorities, notary or bank.

In practice, an entrepreneur should expect to provide documents establishing their identity, address, professional background and, where requested, criminal record. Information relating to the future business activity, shareholders, directors, beneficial owners and source of funds is also important.

Foreign documents may need to comply with certain formalities and, depending on the circumstances, may have to be translated in a form accepted by the relevant authorities. As Catalan is the official language of the Principality, this linguistic aspect should be anticipated.

The most effective approach is to request an up-to-date list of the documents specifically required for your application before starting the process. This helps avoid preparing unnecessary documents or, conversely, discovering at a late stage that a document requires translation, certification or an additional formality.

Opening a bank account: a step that requires careful preparation

For many foreign entrepreneurs, dealing with the bank is one of the stages that requires the most preparation. A bank does not simply establish that a company is being incorporated. It also seeks to understand who is behind the project, how the business will generate revenue, which countries it will operate with and where the funds being contributed come from.

You should be able to explain your business model clearly and document the expected financial flows. A realistic business plan, consistent evidence of the source of funds and a transparent presentation of the shareholders can make it easier for the bank to assess the application. Conversely, missing supporting documents or inconsistencies can lead to additional requests and extend the process.

The notary may be involved in the legal incorporation process, but the decision to accept or reject a banking relationship ultimately belongs to the bank concerned.

How long does it take to set up a company in Andorra?

Setting up a company in Andorra generally involves more than just a few days of administrative formalities. The overall timeframe depends on several factors, including the shareholders' profiles, foreign investment, the availability and compliance of the required documents, the bank's review, any necessary translations, the nature of the business activity and the permits required.

An estimate of several weeks can provide a reasonable timeframe for planning a project, but systematically stating that the process will take six, eight or ten weeks would be misleading. Two seemingly similar applications can progress at different speeds. The best way to save time is not to try to bypass checks, but to submit a consistent and complete application from the outset.