How to Set Up a Company in Andorra Without Being a Resident: A Complete Guide
AIE, SL, economic substance, 10% corporate income tax: Everything nonresidents Need to Know in 2026
Important Note: Setting up a company in Andorra as a non-resident is legal and regulated—but requires prior administrative authorization (AIE) from the AFA. Without this authorization, any subscription to shares is legally void. Andorra has participated in the CRS since 2017: Andorran bank accounts are automatically reported to the tax authorities of the account holder’s country of residence. Any business structure must be based on genuine economic substance.
An entrepreneur based in Paris, Geneva, or Barcelona can certainly set up a company in Andorra without residing there. The Principality does not require the founder to be a resident in order to register an SL—but it does impose specific requirements regarding substance, capital, and administrative authorization that most entrepreneurs underestimate. This guide details the entire legal, tax, and practical framework for structuring an Andorran company as a non-resident, in accordance with Andorran law.
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Articles of Incorporation in Catalan
No inheritance tax
CRS active since 2017
What the law says: It is legal to establish an Andorran company without being a resident, but there are restrictions.
The Principality of Andorra does not require a company’s founder to be a resident in order to incorporate a company. A non-resident foreign national may incorporate an SL (Societat Limitada) or an SA (Societat Anònima), hold shares in the company, and serve as a manager—provided that the specific conditions set forth in the legislation on foreign investment are met.
Andorra is not a non-transparent jurisdiction. As a member of the Common Reporting Standard (CRS) since 2017, it engages in the automatic exchange of tax information with France, Spain, Belgium, Switzerland, and all partner countries. Any Andorran company whose partner is a French tax resident will be reported to the French tax authorities as part of this exchange. Compliance is not an option—it is the very condition for the long-term viability of the arrangement.
The fundamental distinction to keep in mind
Incorporating a company in Andorra and obtaining Andorran tax residency are two entirely separate processes. The company will be subject to Andorran corporate income tax (10%—Llei 95/2010, Art. 41) on its profits earned in the Principality, regardless of the director’s residence. However, the personal income of a non-resident executive—including management salaries, distributed dividends, and capital gains—remains taxable in their country of residence, in accordance with that country’s tax laws and any applicable bilateral tax treaties.
| Criterion | Andorran company (non-resident) | French company (based in France) |
|---|---|---|
| Corporate tax | 10% (Law 95/2010, Art. 41) | 25% standard rate |
| IGI / VAT | 4.5% general rate (Law 11/2012, Art. 57) | 20% standard rate |
| Social Security Contributions for Executives | ~22% (CASS) | > 40 % |
| Wealth tax | None | Real Estate Investment Fund (IFI) |
| Inheritance tax | None | Up to 45% in direct line |
| Minimum Capital for an SL | 3,000 € (Law 20/2007, Art. 14) | 1 € (SAS) |
| Tax Depreciation | = accounting depreciation (no reversals) | Numerous off-balance-sheet reversals |
| Prior authorization required | Yes — AIE (threshold: > 10% of the capital) | No |
| Articles of Incorporation | In Catalan, before an Andorran notary | In French |
| Production Time | 2 to 4 months (bottleneck: AIE) | A Few Days (SAS) |
Sources: Law 95/2010 (IS), Law 11/2012 (IGI), Law 20/2007 (capital SL), Law 5/2014 (IRPF). The French rates are provided for comparison purposes only.
Foreign Investment Authorization (FIA): The Essential Prerequisite
Any non-resident wishing to incorporate a company in Andorra or acquire a stake exceeding 10% of its capital must obtain a foreign investment authorization (AIE) from the Autoritat Financera Andorrana (AFA). This requirement is set forth in Article 6 of Law 5/2025: “The subscription of issued shares—whether they constitute part of the initial capital or are issued in connection with a capital increase—is subject to the prior obtaining of an administrative authorization known as a foreign investment authorization.”
The penalty is severe. Any company incorporated without this authorization may be declared null and void by the authorities (Law 5/2025, Art. 17), even if its acts remain valid. The AIE applies to every stage of capital development: initial incorporation AND subsequent capital increases.
Who is affected?
This requirement applies to nonresident foreign individuals, foreign corporations, and any entity with foreign ownership. It does not apply to ownership interests below the 10% threshold. Notable exception: Andorran residents with a valid residence permit are exempt from AIE for non-real estate investments—which is one of the tangible benefits of prior residency for entrepreneurs seeking to simplify their administrative procedures.
Contents of the IEA File
The application to be submitted to the AFA must include, at a minimum, the following: the applicant’s identification document and proof of residence, a detailed description of the proposed economic activity, documentation proving the source of funds, draft articles of incorporation, proof of a physical address in Andorra, and a business plan if the activity is commercial. The foreign investment authorities have become significantly more rigorous in their assessment of the economic viability of projects for the Principality. An incomplete or insufficiently documented application will result in additional delays or rejection.
Realistic timeline: The AIE generally takes between 1 and 1.5 months after a complete application is submitted. This is the main bottleneck in any company formation by a non-resident. It is essential to plan ahead for this step—ideally while proceeding with other steps simultaneously—to avoid delaying the entire timeline.
Real Estate AIE vs. Corporate AIE: Two Distinct Tax Regimes
Real estate investments are subject to a specific AIE, which is governed by different conditions. In particular, since Law 5/2025 took effect on March 6, 2025, an Andorran company whose shareholder is a foreign legal entity can no longer acquire real estate in Andorra—a restriction that directly affects certain wealth management structures. This rule does not apply to non-real estate investments (equity interests, financial assets, commercial activities), for which the standard corporate AIE applies.
SL, SLU, or SA: Which Legal Structure Should You Choose?
Andorran law (Law 20/2007 of October 18, on Joint-Stock Companies and Limited Liability Companies) provides for two main types of corporations: the SA (Societat Anònima) and the SL (Societat Limitada), the single-member variant of which is the SLU (Societat Limitada Unipersonal). For non-residents, the SL accounts for virtually all new incorporations.
| Criterion | SL / SLU | SA |
|---|---|---|
| Minimum Share Capital | 3,000 € (Law 20/2007, Art. 14) | 60 000 € |
| Minimum number of partners | 1 (SLU possible) | 1 |
| Transfer of Shares | Limited — approval by the partners required | Free (shares) |
| Accounting Requirements | Annual Financial Statements | Accounting + Mandatory External Audit |
| Suitable profile | SMEs, freelancers, family-owned holding companies, operational | Large-scale structure, open to third-party investors |
| Incorporation Cost | Notary fees: €600–1,200 | Higher notary fees + audit of contributed assets |
Operating company, holding company, or investment company?
Beyond its legal form, a company’s economic nature determines its tax treatment and obligations. There are three types of structures, distinguished by their purpose:
Operating Company
10% income tax on profitsIdeal for consultants, service providers, e-commerce businesses, content creators, and entrepreneurs conducting actual business operations from Andorra. Requires commercial premises and, in the case of a commercial business, registration with the comú and the central government.
Asset Management Holding Company (General)
10% income tax on profitsHolds all types of assets: equity interests in foreign companies, real estate (subject to Law 5/2025), and financial investments. The general corporate income tax rate of 10% applies to distributed or realized profits.
Pure holding company (Art. 38 IS)
Tax Exemption for Dividends and Capital GainsBusiness activity is limited to holding equity interests in other companies. Dividends received from subsidiaries and capital gains on dispositions are fully exempt, provided that the subsidiary is subject to a tax rate of at least 5% or that a tax treaty exists between Andorra and the subsidiary’s country.
Real economic substance: a non-negotiable condition
This is the point where most poorly structured arrangements fail. An Andorran company with no real economic substance is an empty shell—and the tax authorities of partner countries, particularly France, have the tools to seek its reclassification. The issue is not merely a technical one: it is central.
What is economic substance? For an operating company, substance requires, at a minimum, business premises in Andorra (which may be the director’s residence if the owner consents, or a coworking space), a registered business activity, and—if the director is not an active resident affiliated with the CASS—at least one employee registered with the Andorran social security system. For a holding company, substance requires active Andorran bank accounts, actual cash flows, the regular holding of general meetings in the Principality with properly drafted minutes, and accounting managed by an Andorran fiduciary.
Economic reality takes precedence over legal form. No entity can withstand a tax audit unless it can demonstrate that it actually conducts business or manages its operations in Andorra.
Risk of reclassification in France
For a shareholder who is a French tax resident, an Andorran company lacking substance may be reclassified in France as a shell company or an artificial arrangement, resulting in the retroactive application of French corporate income tax and penalties. Participation in the CRS exchange means that the French tax authorities automatically have access to information on Andorran accounts.
The 8 Steps to Forming an Andorran Company for a Non-Resident
Reservation of the Corporate Name
The Commercial Companies Registry requires three proposed names. The deadline is short (a few days). The company name must appear in the articles of incorporation and in all subsequent corporate documentation (Decree of April 16, 2014, Art. 62).
Submission of the AIE application to the AFA
Complete application package: identification documents, source of funds, draft articles of incorporation, description of the business, and a business plan if the business is for-profit. Average processing time: 4 to 6 weeks. This is the main bottleneck. It is recommended to proceed with other steps simultaneously to avoid wasting time unnecessarily.
Obtaining the NIA (Administrative Identification Number)
An Andorran administrative ID number is required for any official procedure in the Principality. It can be obtained from the Comú or the Andorran government within 1 to 2 days. It must be obtained at the same time as the AIE application.
Opening a Bank Account for the Company
Through Creand, MoraBanc, or Andbank. The due diligence process is rigorous: source of funds, nature of the business, beneficial owners. Deposit of the share capital (minimum €3,000 for an SL) is required before signing the articles of incorporation. Processing time: 4 to 8 weeks, depending on the institution.
Drafting and signing of the articles of incorporation before an Andorran notary
The articles of incorporation must be drafted in Catalan (the Principality’s official language) and signed before an Andorran notary. The address of the registered office must be included in the articles. Notary fees: €600 to €1,200. The notary automatically forwards a copy to the Companies Registry within 15 days (Decree of April 16, 2014, Art. 24).
Registration in the Commercial Register
A company is not legally established until it is registered—registration has constitutive effect (Decree of April 16, 2014, Art. 24). Registration fees: approximately €1,016 per year for an SL. Processing time: 1 to 2 weeks after submission of the complete application.
Business Registration (if engaged in commercial activity)
A separate process from incorporating a company. Authorization is issued jointly by the parish council and the central government. Applicable to any commercial, service, or professional activity. A single company may operate multiple business locations (separate sites or different activities).
Tax Registration and Starting a Business
Registration with the Andorran tax authorities (company NIF). Setting up accounting (Andorran accounting firm), enrollment in the CASS if an employee is hired. The company can then issue invoices. Reporting requirements: annual corporate income tax (July 31, Year N+1), annual personal income tax (March 31, Year N+1), quarterly general income tax.
Estimated total budget (excluding capital): between €2,500 and €3,500 for a simple SL (notary fees, registration, NIA). With the assistance of an expert, the total budget ranges from €5,000 to €8,000, depending on the complexity of the structure. The €3,000 share capital is refundable after registration.
Taxation of Andorran Companies: What Applies to Non-Residents
Andorran companies are subject to Andorran corporate income tax on profits earned in the Principality, regardless of their executive’s place of residence. The rates are set by law:
| Taxation | Rate / Plan | Legal Source |
|---|---|---|
| IS — General Rate | 10 % | Law 95/2010, Art. 41 |
| IS — Andorran mutual funds | 0 % | Law 95/2010, § 41.2 |
| IS — pure holding company, Art. 38 (dividends received) | Full Exemption | Law 95/2010, Art. 38 |
| IGI (Andorran VAT) — standard rate | 4,5 % | Law 11/2012, Art. 57 |
| IGI — Financial and Banking Services | 9,5 % | Law 11/2012, Art. 60 |
| Withholding tax on dividends from France → Andorran holding company (Andorran resident) | 5 % | 2022 France-Andorra Agreement |
| Withholding Tax on Dividends from France → Andorran Holding Company (Non-Resident) | 15 % | 2022 France-Andorra Agreement |
| Tax Depreciation | = accounting depreciation (no reversals) | Law 95/2010, Art. 10 |
| ITP — Real Estate Transfer Taxes | 4 % | Andorran ITP Law |
A VAT Tip for Real Estate Purchases from Developers
When an Andorran company purchases new real estate from a developer, the VAT (IGI at 4.5%) is recoverable by the company, which is not possible for an individual. On a €10 million purchase, this represents €450,000 in recoverable IGI—a structural advantage to consider when choosing the ownership structure. This optimization does not apply to purchases from private individuals, which are subject to non-recoverable ITP.
Taxation of the Personal Income of a Nonresident Executive
Non-resident executives remain subject to taxation in their country of residence on the income they receive from their Andorran company: management salary, distributed dividends, and refunds of share premiums (the latter are treated differently from dividends in France and are not subject to withholding tax). The 2022 France-Andorra tax treaty prevents double taxation. The treaty between Spain and Andorra has similar effects. Anticipating this personal cash flow is essential for calculating the actual tax savings resulting from this arrangement.
Sofía, a digital strategy consultant based in Barcelona
Sofía invoices her international clients from Barcelona through a Spanish SL subject to a 25% corporate income tax rate. Her business—providing digital transformation consulting services to European brands—does not require a fixed physical presence. She is considering setting up an Andorran SL to invoice her new assignments outside of Spain, while maintaining her Spanish tax residency for the time being.
Engage analyzes her situation: Sofía can legally establish an Andorran SL for the business activities carried out from Andorra, provided she establishes a genuine presence there—an office in Andorra la Vella, effective management of the company from within the Principality, and local accounting. In a second step, if she wishes to transfer her tax residence to Andorra (personal income tax capped at 10%, with a tax-free allowance of €24,000—Llei 5/2014, Articles 35 and 43), the overall benefit becomes structural. The arrangement can be set up in four months, including the AIE.
“I thought setting up a company in Andorra from Spain would be complicated. The real work is putting together a solid application for the AIE and establishing the company’s substance from day one. Engage guided me through the process step by step.”
6 Mistakes to Avoid When Setting Up an Andorran Company Without Being a Resident
Mistake 1 — Acting Before the AIE
Starting the incorporation process without first filing the AIE application is the most common mistake. A company incorporated without authorization may be declared null and void. It is essential to file the AIE application first—or at the same time as reserving the company name.
Mistake 2 — Underestimating the time required
The entire process—AIE, opening a bank account, notary, and registration—takes between 2 and 4 months in the best-case scenario. Failing to anticipate this timeframe creates periods of tax uncertainty and operational risks for clients and partners.
Mistake 3 — Creating a shell without substance
An Andorran company with no actual physical address, no active bank account, and no employees enrolled in the CASS—if the director is not a resident—is a shell company. It will be reclassified by foreign authorities. Substance cannot be fabricated retroactively during a tax audit.
Mistake 4 — Failing to Report Andorran Accounts
Andorra automatically reports information on non-residents' bank accounts to their countries of residence (CRS). Failure to report these accounts constitutes a separate reporting violation, which may be penalized independently of the structure itself.
Mistake 5 — Confusing corporate taxation with executive taxation
The company pays Andorran corporate income tax at a rate of 10% on its profits. However, dividends paid to a nonresident executive are taxed in the executive’s country of residence according to that country’s own rules. Failing to anticipate this personal tax impact results in an incomplete calculation of the tax benefit—and can sometimes be disappointing if the overall structure is not optimized.
Mistake 6 — Neglecting the articles of incorporation in Catalan
The articles of incorporation must be drafted in Catalan and signed before an Andorran notary. A document in French or Spanish will not be accepted by the Companies Registry. Working with a local professional is not optional—it is a legal requirement.
Sample Reverse Schedule — From Decision to First Invoice
Do you have to become an Andorran resident to take things further?
Setting up an Andorran company optimizes the entity’s tax treatment (corporate income tax at 10%, general income tax at 4.5%). However, the personal income of a non-resident executive—such as dividends received and management salaries—remains subject to taxation in their country of residence according to that country’s own rules, which may be significantly less favorable.
Andorran tax residency goes much further: Personal income tax capped at 10% (Law 5/2014, Art. 43) with a personal exemption of €24,000 (Art. 35), dividends from the Andorran holding company paid to Andorran resident shareholders taxed at 0%, and no wealth tax or inheritance tax. The combination of corporate structure and residency reduces the overall tax burden to 5% on dividends remitted from French subsidiaries (conventional withholding tax) and then to 0% upon distribution to the Andorran resident.
There are two types of residency status available. Active residency requires engaging in professional activity within the country (a minimum of 183 days per year; a business plan must be submitted for government approval—a process that has become increasingly selective since early 2026). Passive residency is based on a minimum investment of €1 million in Andorra, a presence of only 90 days per year, and a deposit of €50,000 with the AFA—with no requirement to engage in professional activity in the country.
Setting up an Andorran company for a non-resident is not an unusual arrangement—it is a structured process, governed by specific laws, that we regularly assist entrepreneurs and investors from France, Spain, Switzerland, and other jurisdictions with. The key to success lies in three things: a solid AIE application from the very first submission, genuine economic substance established from day one, and a clear understanding of the executive’s personal tax situation in their country of residence.
Ready to start your Andorran company?
AIE, articles of incorporation in Catalan, opening a bank account, economic substance, cross-border taxation: our experts guide non-residents through every step—from the initial application to the first invoice.
Getting Started with EngageFAQ — Andorran Companies for Non-Residents
Can a non-resident form a company in Andorra without living there?
Yes. Andorran residency is not a prerequisite for forming a company. A non-resident foreign national may form an SL, serve as a partner and manager, provided they obtain a Foreign Investment Authorization (AIE) from the AFA for any stake exceeding 10% of the capital. The company will be subject to Andorran corporate income tax at a rate of 10% on its profits, but the manager’s personal income remains taxable in their country of residence.
What is the AIE, and why is it mandatory?
The Foreign Investment Authorization (AIE) is a prior administrative authorization issued by the Autoritat Financera Andorrana (AFA). It is required for any non-resident to acquire an equity interest of more than 10% in an Andorran company (Law 5/2025, Art. 6). Without this authorization, the subscription of shares is legally void. The processing time is 4 to 6 weeks for a complete application. The AIE applies to the initial incorporation and to each capital increase.
What is the minimum capital required to form an SL in Andorra?
3,000 € for an SL (Societat Limitada) or an SLU (Societat Limitada Unipersonal), in accordance with Law 20/2007, Article 14. This capital must be deposited in full into an Andorran bank account before the articles of incorporation are signed before a notary. It is refundable to the company after registration.
Will my Andorran company be visible to the French tax authorities?
Yes. Andorra has been participating in the Common Reporting Standard (CRS) since 2017 and automatically reports information on non-residents’ bank accounts to partner tax authorities. An Andorran company whose partner is a French tax resident will be reported to the French tax authorities. For this reason, genuine economic substance and compliance with reporting requirements are not optional—they are essential to the long-term legal viability of the arrangement.
Can I manage my Andorran company from abroad?
Yes, remote management is possible for certain types of businesses (consulting, digital services, holding companies). However, the company must demonstrate local economic substance: a physical address in Andorra, an active bank account, and—if the executive is not an active resident affiliated with the CASS—at least one employee registered with the Andorran social security system. A company whose effective management is exercised exclusively from abroad risks being reclassified by the tax authorities of the director’s country.
How long does it take for a non-resident to set up a company in Andorra?
Typically between 2 and 4 months, depending on the complexity of the case. The AIE application is the main bottleneck (4 to 6 weeks), followed by opening a bank account (4 to 8 weeks, depending on the bank). Signing the articles of incorporation, registration with the Commercial Registry, and tax registration then take an additional 2 to 4 weeks. Starting these processes simultaneously from day one—AIE, NIA, and preparation of the articles of incorporation—helps shorten the overall timeline.
What is the difference between a “general” Andorran holding company and a pure holding company (Art. 38)?
A general holding company may hold any type of asset (equity interests, real estate, financial investments) and is subject to a 10% corporate income tax rate on its profits. A pure holding company (Article 38 of Law 95/2010) is limited to holding equity interests in other companies and benefits from a total exemption on dividends received from its subsidiaries and capital gains on disposals, provided that the subsidiaries are subject to a tax rate of at least 5% in their country or that a tax treaty exists with Andorra. It is the ideal vehicle for entrepreneurs who anticipate selling their business.
