Andorra has become an increasingly attractive destination for businesses seeking a low-tax European jurisdiction. With a maximum corporate tax rate of 10%, a strategic location between France and Spain, and a growing ecosystem of professional services, Andorra offers compelling advantages for international business.
This guide covers everything you need to know about setting up a company in Andorra in 2026.
Andorra’s Corporate Tax System
Standard Corporate Tax Rate
The standard corporate income tax rate (Impost de Societats) in Andorra is 10%. This is one of the lowest corporate tax rates in Europe, making Andorra highly competitive for businesses.
Reduced Rates
Certain activities benefit from reduced tax rates:
- Financial institutions: 10%
- Insurance companies: 10%
- Entities managing transport, telecommunications, and utilities: 10%
- Newly created entities for certain activities may benefit from a reduced rate for the first three years
Non-Resident Income Tax
Non-resident entities earning income in Andorra are subject to a withholding tax of 10% on dividends, interest, and royalties. Capital gains from the sale of Andorran assets are also taxed at 10%.
Types of Business Entities
Societat Anonima (SA)
The SA is a public limited company requiring a minimum share capital of €60,000. At least 25% of the capital must be paid up at incorporation. This structure is suitable for larger businesses.
Societat de Responsabilitat Limitada (SL)
The SL is a private limited company requiring a minimum share capital of €3,000. This is the most common structure for small and medium-sized businesses in Andorra.
Branch Office
Foreign companies can establish a branch office in Andorra. The branch is not a separate legal entity, and the parent company is liable for its obligations. Branch profits are subject to corporate tax in Andorra.
Holding Company
Andorra offers a favorable regime for holding companies (Societats de Tenencia de Valors Internacionals or HOLDING). Dividends and capital gains from qualifying foreign subsidiaries are 100% exempt from corporate tax, provided the subsidiary is subject to a minimum effective tax rate of 5%.
Incorporation Process
Step 1: Reserve the Company Name
Submit a name reservation request to the Andorran Business Register (Registre de Societats). The name must be unique and not conflict with existing entities.
Step 2: Obtain Business Authorization
Apply for a business authorization from the Andorran government. This requires demonstrating the economic benefit of the business activity to Andorra.
Step 3: Open a Bank Account
Deposit the minimum share capital in an Andorran bank account. The bank will issue a certificate confirming the deposit.
Step 4: Execute the Deed of Incorporation
A notary public executes the deed of incorporation, which includes the company’s articles of association.
Step 5: Register the Company
Register the company with the Andorran Business Register and obtain a tax identification number (NRT).
Step 6: Register for Taxes
Register with the Andorran tax authorities for corporate tax, indirect tax (IGI), and any other applicable taxes.
Other Taxes in Andorra
Indirect General Tax (IGI)
Andorra’s equivalent of VAT is the IGI (Impost General Indirect), with a standard rate of 4.5%. Reduced rates apply to certain goods and services:
- 0%: Healthcare, education, and financial services
- 1%: Basic food products, books, and medicines
- 2.5%: Transport, culture, and certain services
- 4.5%: Standard rate for most goods and services
Personal Income Tax (IRPF)
Andorra’s personal income tax has a maximum rate of 10%, with progressive brackets:
- Up to €24,000: 0%
- €24,001 to €40,000: 5%
- Above €40,000: 10%
Wealth Tax
Andorra does not impose a wealth tax on individuals or companies.
Residency for Business Owners
Business owners who establish a company in Andorra can apply for active residency, which requires:
- Active involvement in the management of the company
- Spending at least 183 days per year in Andorra
- Proof of sufficient income and accommodation
Frequently Asked Questions
How long does it take to set up a company in Andorra?
The incorporation process typically takes 4 to 8 weeks, depending on the complexity of the business and the speed of government approvals.
Is Andorra a tax haven?
Andorra has been removed from the OECD’s grey list and is considered a cooperative jurisdiction. It has signed tax information exchange agreements with numerous countries and complies with international transparency standards.
Can I operate my business remotely from Andorra?
Yes. Andorra has excellent internet infrastructure and a growing digital nomad community. The active residency permit allows you to manage your business from Andorra.
Key Takeaways
Andorra offers a compelling combination of low corporate tax rates, simple incorporation procedures, and a favorable business environment. The 10% corporate tax rate, 4.5% IGI, and absence of wealth tax make it an attractive option for international businesses.
Professional advice is essential to navigate the incorporation process and ensure compliance with Andorran regulations.
Disclaimer: This article is for informational purposes only and does not constitute professional tax advice. Tax laws change frequently. Consult a qualified tax advisor for guidance specific to your situation.