June 2, 2019

Company in Andorra and tax optimization in Europe

The companies in Andorra offers excellent tax advantages to all those who want to establish a business in Europe, for example, you can establish a company «home-office» and apply for residency, if you ask yourself why it would be a good idea to apply for residence in Andorra, keep reading this article. 
Andorra is a principality located between Spain and France, a principality that is not part of the European Union or the Schengen treaty, however its official currency is the EURO, its official language is Catalan but Spanish, French and Portuguese are also spoken in this small territory of 70,000 inhabitants, which receives approximately 8 million tourists per year.

Andorra is a perfect place to live with your family for many reasons, including the high level of security, free education, and excellent financial services.

Andorran Companies

Having a company in Andorra will make it easier for you to obtain a bank account at any of the banks in this country. Banks in Andorra are requested by many entrepreneurs due to bank secrecy because Andorra is located in the European continent but is not part of the European Union.

Those non-residents can own 100% of an Andorra company applying for foreign investment. The incorporation time is approximately 1 month.

  • Limited Company (SL): the social capital of 3,000 euros
  • Sociedad Anónima (SA): the social capital of 60,000 euros

Limited liability companies must keep accounts and present annual accounts to the government.

The necessary documents to create a company in Andorra are Passport, proof of address, criminal record certificate and a business plan.

Benefits of having a company in Andorra, a bank account or living there:

  • Base in Europe
  • Low-cost real estate (compared to other European countries)
  • Banking secrecy
  • Excellent financial products
  • Exemption from inheritance taxes
  • Low taxes in companies
  • Excellent medical facilities
  • Opportunity to live on the border of France or Spain

Andorra has tax information exchange agreements signed with 22 countries including the Republic of Austria, Liechtenstein, Monaco, San Marino, France, Belgium, Argentina, the Netherlands, Portugal, Spain, Denmark, the National Government of the Faroe Islands , Finland, Greenland, Iceland, Norway, Sweden, Germany, Australia, Poland, Czech Republic and Switzerland.

Taxes in Andorra

The tax that companies in Andorra generally is 10%, and this can be reduced up to 2%

As for personal income taxes, in Andorra donations and inheritances are not subject to taxes

As of January 1, 2015, Andorran tax residents will be taxed at a nominal tax rate of 10%.

The first 24,000 euros of income are exempt from taxes or up to 40,000 euros in some cases. Income between 24,000 and 40,000 will be taxed at an effective tax rate of 5% and the first 3,000 euros of savings and real estate capital income will be exempt.

Residence in Andorra

Types of residences that you can request in Andorra:

  • By self-employment
  • Without paid employment
  • For professionals with international projection
  • For sports, cultural or scientific reasons
  • For research, sports training, internships or studies
  • To be admitted to the private geriatric center or to private medical treatment or therapeutic center

The cases mentioned above are known as PASSIVE Residences, below the requirements:

  • Be of age
  • Check that you have enough financial means to be able to live in Andorra, showing income of 300% higher than the minimum wage in Andorra
  • Have insurance for illness, retirement, and disability
  • Establish permanent residence in Andorra for at least 90 days
  • Criminal background check
  • Medical exam
  • Document or lease agreement for immovable property in Andorra
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