Company Formation and the Residency Options Available.
Since Andorra opened its doors to foreign ownership of companies without the need for a local Andorran administrator and majority shareholder ( Known as a"prestanom") there remain some complications about which you should be aware before you take any steps to form a company.
- Prohibited areas include online gambling sites, sex sites, banking, finance and areas of other online businesses, there are many others.
- There are restricted areas that the Government either will not approve or for which you will need to be professionally qualified and registered locally, for example medical areas, estate agencies, architects and so on.
- Then there are the geographical considerations as to where any current businesses may be based. Other than obvious ones such as North Korea and Iran, many countries in Africa for example are on various watch lists and or blacklists .
- Then there are the geographical considerations of clients of the companies, are they or will they be based in restricted areas.
The first hurdle in getting approval in principle will be the banks. They are the institutions that by pressure from various global diktats must be seen to be vetting all of the above areas for an account to be allowed in Andorra. Without a company account ( and many have been denied) then the next step for seeking company approval from the Government cannot take place. I am able to advise on this first step by email subject to some KYC that I can forward to the bank with whom after preliminary approval you can deal directly with to drill down into the documents that compliance will need to see.
The banks also need to see commitment to Andorra. The policy is to avoid Andorra simply being used as a low tax base by foreign companies, nothing more will upset the neighbours other than that. By commitment I am referring to either one or more of the shareholders/Directors applying for residency, or for a foreign company to develop the business inside Andorra to the benefit of the local workforce or to the country.
With the above principles in place, please be advised that I will not be able to take on cases where non-resident companies are enquiring. Where residency remains one of the objectives behind company formation then I would be delighted to explore further with you.
Under the new regulations any person who owns 20% or more of a company in Andorra can then apply for Category D Active Residency or Category B Passive Residency (For example husband and wife jointly owning a company each with 20% or more). An applicant may also own 100% of an Andorran company (called an S.L.U), there is no need for more than one Director. In both cases the minimum share capital requirement is €3,000. It is important to discuss with me which residency option is the preferred route since the timing sequence for Category B and D is markedly different.
I work closely with local Accountants and a lawyer who are able to advise you and arrange everything for you, from approval of an investment by a foreigner (first step) to actual company formation and a trading license (second step). The accountants will complete the company formation stage and I complete the Immigration stage for whichever category of residency you may choose (Or not if no residency is actually required). Please note that procedures for opening a company in Andorra differ from the norm in most jurisdictions, for example there are no ready made shelf companies for purchase, each company application being subject to approval both on the applicant and the area of business. That does not mean that there are no companies available for purchase but it does mean that the purchaser will be subject to the same investment approval and in most cases the statutes of the existing company will require to be changed. All things considered a new company formation is the best route. Fees are quite high compared to "off the shelf" packages and much of the expense is Government registration.
In general the following documentation is required for each shareholder to commence Foreign Investment Approval for company formation:
· An Apostillised/Legalised Police Certificate from the country of birth and if the passport is different a second police report from the country of nationality of the passport. In some cases a third police report if the current country of residence is different again (please discuss as this can be dispensed with in most cases).
· An Apostillised/Legalised copy of the information page of your passport(s) or if in Andorra we can arrange to have your passport original notarised (a lot easier if you are planning to be here).
· A Curriculum Vitae to show you either have the experience of operating such a company in Andorra and/or are so qualifiied.
Sequence Events of Company Formation.
To start the company formation it is best to arrange a short visit during which you can notarise in Andorra the documents you have obtained and the copy of the passport and instruct the lawyer or Accountants and look to open a bank account.
A company name will then be agreed upon and applied for along with foreign investment approval. Government are required to respond within 30 days and may do so to request further information or clarification. In general a simple application will receive approval within the 30 days. The applicant is then required to return to Andorra to go before the Notary to complete the company registration. The company stautes and registration are the available within 12 to 15 days from the date of the Notary signing.
At this stage and if residency Category D is to be requested we can then apply to Immigration.
The final stage of company formation is the local trading license called the "Obertura de Comerç". This involves an inspection of the registered premises, health and safety due diligence and an approval at Parish level to operate the company at that address. Please note that the address can be your residential address subject to some basic minimum requirements and the agreement fo the landlord.
Also as soon as residency is approved normally within a few days you will need to apply for CASS ( Local social security) which is obligatory for all shareholders. The monthly contribution is fixed at 449.10 euros per shareholder (from 2018) but in the first 12 months this is reduced by 50% to 224.55 euros monthly.
Company profits tax is 10% but the distribution of profits from an Andorran company is not then taxed at the personal level. IGI ( or IVA, VAT etc is 4.5%). Annual returns are required for accounts, tax calculation, IGI ( twice per year or more) and the accountants will be able to complete all of that for you.
Please refer to the webpage that deals with the Immigration requirements for company formation under Category D known as "Compte Propi" if you are considering active residency or if you need an Andorran company, residency and flexibility of actually being in Andorra and developing your business here, then you may wish to consider Category B of passive resuidency suitable for where the majority of trading ( minimum 85%) will be outside Andorra. Both procedures are markedly different when it comes to Immigration and residency.