Creating a company in Andorra: SL or SA?

Creating a company in Andorra: complete guide to SL vs SA

Since the opening of the Andorran economy to foreign investors in 2012, the Principality of Andorra has become a leading destination for business creation in Europe. A corporate tax rate of 10%, moderate social charges, a strategic geographical position between France and Spain, and a stable and secure business environment: Andorra's assets for entrepreneurs are considerable. This detailed guide presents the two main legal forms — the Societat Limitada (SL) and the Societat Anonima (SA) — together with the steps, conditions and advice for a successful company formation.

SL vs SA: understanding the two legal forms

The Societat Limitada (SL) is the Andorran equivalent of the French SARL or the Spanish SRL. It is the most common legal form in Andorra, chosen by the vast majority of entrepreneurs and SMEs. It is characterised by its operational flexibility, reduced minimum share capital and the limited liability of its members up to the amount of their contributions.

The minimum share capital of an SL is 3,000 euros, of which at least 1,000 euros must be paid up at the time of incorporation. The number of members may range from 1 (SLU - Societat Limitada Unipersonal) to a maximum that is not legally capped but in practice remains limited. Shares are not freely transferable: any transfer to an external third party is subject to the pre-emption right of existing members.

The Societat Anonima (SA) is the equivalent of the French SA. It is designed for larger-scale projects requiring greater capital and offering greater ease of share transfer. The minimum share capital is 60,000 euros, fully subscribed and at least 25% paid up at the time of incorporation.

The SA differs from the SL through the free transferability of its shares, the ability to issue different categories of shares (ordinary, preference) and a more structured governance framework (board of directors mandatory above a certain number of shareholders). It is generally chosen for capital-intensive projects, regulated activities (banking, insurance) and companies anticipating rapid growth with the entry of new investors.

Detailed comparison: SL vs SA

Regarding minimum share capital, the SL requires 3,000 euros compared with 60,000 euros for the SA. As for members' liability, it is limited to contributions in both cases. Transferability of shares is restricted for the SL (pre-emption right of members) and free for the SA. In terms of governance, the SL operates with one or more managers (administradors), whilst the SA may have a board of directors. The obligation to audit accounts applies systematically to the SA, and to the SL only if it exceeds certain thresholds. Publication of accounts is mandatory for the SA and limited for the SL.

For the majority of sole traders, consultants, freelancers, small and medium-sized enterprises and family holding companies, the SL is the most appropriate choice. The SA is recommended for projects requiring substantial capital, fundraising, regulated activities or structures intended to accommodate multiple investors.

The 7 steps to creating a company in Andorra

Step 1: Reservation of the company name. The first step is to reserve the name of your future company with the Companies Register of the Andorran Government. You must propose three names in order of preference. The register checks availability and reserves the chosen name for a limited period. This process generally takes 3 to 5 working days.

Step 2: Application for foreign investment authorisation. If one or more members are of foreign nationality, prior authorisation from the Andorran government is required. This application is submitted to the Ministry of the Economy and includes a description of the planned activity, the identity of the members and the investment plan. The processing time is approximately 4 to 6 weeks.

Step 3: Opening a bank account and depositing the share capital. A bank account in the name of the company in formation is opened with an Andorran bank. The minimum share capital is deposited into this account. Andorran banks apply rigorous KYC (Know Your Customer) procedures: be prepared to provide proof of identity, origin of funds and professional activity.

Step 4: Drafting of the articles of association. The articles of association (estatuts) are drafted in Catalan (the official language of Andorra) and define the corporate purpose, share capital, distribution of shares, governance rules and decision-making procedures. A lawyer specialising in Andorran company law must supervise this drafting.

Step 5: Signing the deed of incorporation before a notary. The members (or their representatives) appear before an Andorran notary to sign the deed of incorporation (escriptura de constitucio). The notary verifies the compliance of the articles, the identity of the members and the deposit of the share capital. This deed is then registered with the Companies Register.

Step 6: Tax registration and obtaining the NRT. The company is registered with the Department of Taxes and Borders to obtain its Tax Registration Number (NRT), the equivalent of a tax identification number. This registration is necessary for invoicing, filing and paying taxes (IS, IGI).

Step 7: Registration with CASS and commencement of activity. If the company employs staff (including the director), it must register with CASS (Caixa Andorrana de Seguretat Social) as an employer. Social contributions amount to 15.5% borne by the employer and 6.5% by the employee, giving a total of 22%. The business may then officially commence.

Required documents

To incorporate a company in Andorra, the following documents are required for each member and director: a valid passport, a criminal record extract less than 3 months old (apostilled and translated into Catalan), recent proof of address, a detailed curriculum vitae, a bank certificate or declaration of origin of funds, and for active residents, a medical certificate issued by an approved doctor in Andorra.

For the company itself: the name reservation certificate, the foreign investment authorisation, the share capital deposit certificate, the articles of association drafted in Catalan and a detailed business plan (recommended).

Advantages of creating a company in Andorra

Taxation is naturally the most cited advantage. Corporate tax at 10% and IGI at 4.5% place Andorra among the most competitive jurisdictions in Europe. But the advantages extend well beyond taxation alone.

Andorra's strategic geographical position, between France and Spain, offers privileged access to both markets. The airports of Toulouse (2h30 by road), Barcelona (2h30) and Girona (3h) provide easy access to the major European cities. The Andorra la Vella heliport also offers rapid connections.

Moderate social charges (22% in total) contrast with French levels (approximately 60%) and allow labour costs to be controlled. The Andorran banking system is solid, well capitalised and offers quality private banking services. The political and economic stability of the Principality, co-presided by the President of the French Republic and the Bishop of Urgell, ensures a secure institutional framework.

Vehicle registration in Andorra

An often overlooked advantage: registering vehicles in Andorra allows one to benefit from highly competitive tax-free purchase prices thanks to the IGI of 4.5% (compared with 20% VAT in France). For a luxury vehicle at 100,000 euros before tax, the saving is 15,500 euros. Motor insurance is also significantly cheaper in Andorra.

Andorran companies may register company vehicles in the company's name, which constitutes an additional tax advantage since vehicle-related expenses (leasing, fuel, insurance, maintenance) are deductible from taxable profit.

Substance requirements: a word of caution

A crucial point deserves particular attention: economic substance requirements. Andorra, in accordance with international OECD standards and within the framework of its transparency commitments, requires that companies created in the Principality have genuine economic substance.

This means that the company must have physical premises in Andorra (office, commercial premises), a director effectively residing in Andorra, employees if the activity warrants it, and genuine, documented economic activity. 'Letterbox' companies without real substance are exposed to tax penalties and recharacterisation by foreign tax authorities.

Both the Andorran authorities and the French and Spanish tax administrations are increasingly vigilant on this point. It is imperative to structure one's company with genuine and documentable economic substance. This is an area where the expertise of Aurea Gestoria Group is decisive: we guide you in structuring your company so that it fully meets substance requirements whilst optimising your tax position.

The role of Aurea in creating your company

Creating a company in Andorra involves navigating between Andorran regulations (in Catalan), banking procedures, tax requirements and implications in your country of origin. Aurea Gestoria Group handles the entire process: name reservation, obtaining foreign investment authorisation, coordination with the notary and banks, drafting of articles, tax and social registration, and referral to specialist accountants and lawyers.

Our approach is that of a single point of contact: you have a dedicated adviser who coordinates all parties involved and keeps you informed of each development. We do not simply create your company; we support you in its strategic structuring so that it best serves your personal and professional objectives.

Conclusion

Creating a company in Andorra is a strategic step that can transform your tax and professional situation. Whether you opt for an SL or an SA, the advantages are considerable: competitive taxation, moderate social charges, strategic geographical position and exceptional quality of life. However, business creation in Andorra requires rigorous preparation, knowledge of local procedures and particular attention to economic substance requirements.

The information provided is for guidance purposes only. Contact Aurea for personalised support.