Even though it is not considered yet a very favorable place of business for foreign entrepreneurs, due to the fact that is not yet an EU member and the majority of any company opened here must be owned by an Andorran citizen(born in Andorra, or a Privileged Resident with more than 20 years' residence-exception being the Spanish and French nationals where the period of continuous residence is a minimum of 10 year) the foreign entrepreneurs are seeking to open businesses here due to the favorable tax context, with no income or corporate taxes.
The main law governing the company’s operations and transactions is the “Corporations Act 1983” which governs the three types of company, the Societat de Responsabilitat Limitada and the Societat per Accions and the Societat Colectiva.
The most common form of business in Andorra is the Sociedad Limidad-limited liability company, especially designed for trading activities.
Formed by at least two partners, with a minimum share capital of 3000 EUR, it requires in the beginning of registration the election of a unique name. The investors must be aware that certain names are forbidden and a name once chose must be stated in Catalan.
At the base of the company sits the “estatus”-the Memorandum of Association which after its drafting must be presented in front of the Andorran Government along with a petition for incorporation. This step can be difficult when it comes to foreign entities, especially when it comes to non-residents or newcomers.
If the government is granting the permission to establish the newly formed company, then the representatives can deposit the minimum share capital in a bank account and a notary will handle all the incorporation procedures.
The applicant must deposit the necessary documentation at the Commercial Register in order to obtain a trading license, or the 'Registre de Comerc' permission.
The premises where the company will operate business must be approved by the Commune before starting the trades and in the end, the Government must approve the formal opening of the newly formed company.
The whole process of incorporation takes around three months and even longer if the procedures are delayed by the authorities or if the documents are not properly submitted. This is the reason it is advisable to seek specialized support from a law firm specialized in this type of transactions.