Legal structures in Andorra: SL, SA, partnership, which structure to choose?

Unlike France, where company structures come in some ten different forms that are sometimes hard to tell apart, Andorra has opted for a deliberately limited range. Three main structures cover almost all projects: the limited company, the public limited company and, more marginally, the general partnership. One point deserves to be made from the outset: in Andorra, the choice of legal form has no bearing on your taxation. Corporate income tax remains capped at 10% whatever the structure chosen. The decision therefore comes down to operational criteria: available capital, governance, exposure of your personal assets, and the capacity to bring in investors.

This article offers an overview of company legal forms in Andorra, from their legal framework to the practical criteria that should guide your decision.

The legal framework for companies in Andorra

Before comparing the structures, it is worth understanding the legal environment in which they operate. It is precisely this framework that sets Andorra apart from many other moderate-tax jurisdictions: the Principality offers a recent, codified and stable company law.

A recent and codified company law

Andorran capital companies are governed by the Llei 20/2007 del 18 d'octubre de societats anònimes i de responsabilitat limitada. This text governs the formation, operation, governance and dissolution of public limited companies (SA) and limited liability companies (SL). In particular, it sets the capital thresholds, the rules on shareholder liability and the obligations to file accounts. This recent codification gives entrepreneurs a clear framework, aligned with European standards, without the accumulation of texts found in older legal systems.

A stable institutional framework

Andorra is a parliamentary co-principality, whose two co-princes are the President of the French Republic and the Bishop of Urgell. The 1993 Constitution gave the country modern institutions, a parliament, a government and an independent judiciary. For an entrepreneur, this legal and institutional stability is not a detail: it guarantees the predictability of the rules and the security of investment over the long term. Where other countries alter their business law with each change of government, Andorra follows a steady course.

Company legal forms in Andorra: an overview

In Andorra, two broad families of structures can be distinguished. On one side, capital companies, where shareholders' liability is limited to their contributions: these are the SL and the SA, which account for the vast majority of new company formations. On the other, the partnership, represented by the general partnership, in which the partners commit their personal assets. Alongside these companies with legal personality, operating in one's own name remains possible through the status of sole trader. Let us review each of these options.

The Limited Company (SL / SLU)

The limited company (Societat Limitada) is the most widely used legal form in Andorra, across all categories of entrepreneurs. It accounts for the large majority of companies formed in the Principality. The Andorran equivalent of the French SARL, it combines protected liability, moderate start-up capital and flexible governance, making it the reference structure for SMEs, independent professionals and consulting activities.

Capital and formation

The minimum capital required to form an SL is €3,000, which must be fully paid up and deposited in an Andorran bank account before registration. The bank issues a deposit certificate, essential for signing the deed of incorporation before a notary. This moderate start-up amount makes the SL the natural entry point for projects in their launch phase and for service activities with no significant capital requirements.

Shareholder liability and personal assets

Shareholders' liability is strictly limited to their contributions. In other words, your personal assets are not committed beyond your initial investment. This is one of the major advantages of this structure: should the company run into difficulty, creditors cannot pursue the shareholders' personal assets. This protection clearly distinguishes the SL from the general partnership.

Governance and transfer of shares

Managing an SL is flexible. It can be entrusted to a sole director, to several joint and several or joint directors, or even to a board of directors for larger structures. The partners may be individuals or legal entities, resident or non-resident in Andorra, Andorran or foreign. The transfer of shares is not subject by law to the partners' approval: free transferability is the principle. The articles of association may, however, provide for restrictions (approval clause, right of first refusal), provided they do not render the shares practically non-transferable. Any transfer must moreover be formalised by Andorran notarial deed and recorded in the Companies Register.

For which type of entrepreneur?

The SL is suitable for SMEs, consulting, trade and digital services activities, as well as for project holders seeking a simple, lightly capitalised and protective structure. An entrepreneur who wishes to operate alone opts for the SLU (Single-Member Limited Company), which offers the same protective framework with a sole partner. The SL is also frequently used as a patrimonial holding or as a real estate holding structure.

The Public Limited Company (SA / SAU)

The public limited company (Societat Anònima) is intended for larger-scale projects, involving several investors, formalised governance or an aim to raise capital. It remains a minority choice in Andorra, as most entrepreneurs find the SL to be a sufficient framework, but it becomes relevant whenever the project requires substantial capital or enhanced institutional credibility.

Minimum capital and payment

The minimum capital of an SA is €60,000, which must be fully paid up from incorporation, like that of the SL. This high threshold, twenty times that of the SL, makes it a tool reserved for larger companies or arrangements requiring a substantial financial base.

Shares and governance

The capital of an SA is divided into shares. Shares are freely transferable, unless restricted by the articles of association. As with SL shares, any transfer must however be formalised by Andorran notarial deed and recorded in the Companies Register. Its higher capital and formalised governance make the SA the natural structure for groups, multi-shareholder arrangements and companies intended to grow through contributions of outside capital. The SA may be provided with a board of directors, with resident or non-resident directors. The SAU (Single-Member Public Limited Company) allows this framework to be used while remaining the sole partner, which is sometimes required in certain group arrangements regardless of the number of shareholders.

Foreign investment authorisation

As with the SL, a non-resident investor must obtain the prior foreign investment authorisation issued by the Andorran government before incorporating an SA. This authorisation is a prerequisite for the creation of the company and is subject to an examination of the project and the origin of the funds.

For which type of project?

The SA is suitable for groups and multi-shareholder structures, for projects bringing together numerous investors, for large-scale investment holdings and for companies whose project is intended to grow through capital increases. It is also chosen by some entrepreneurs for the institutional credibility it confers internationally.

The general partnership (societat col·lectiva)

Less common, the general partnership is a partnership in which the partners are jointly and severally and unlimitedly liable for the company's debts. Their personal assets may therefore be committed beyond their contributions, which constitutes a fundamental difference with the SL and the SA. There is no legal minimum capital to form a general partnership.

This structure is used in very specific patrimonial or family contexts, where the partners share common long-term interests and fully control their risk exposure. Outside this framework, it is generally not recommended: the absence of a cap on liability directly exposes the partners' assets, which most entrepreneurial projects, on the contrary, seek to avoid.

And the sole trader (empresari individual)?

Alongside companies endowed with legal personality, it remains possible to carry on an activity in one's own name under the status of sole trader. In this case, the activity does not give rise to a legal entity distinct from the person: the entrepreneur operates in their own name and is liable for the debts of their activity on their own assets.

This status may suit simple, individual activities with low risk exposure. However, as soon as an activity involves liability concerns, the SLU offers a far more protective framework, isolating the entrepreneur's personal assets for an entry capital that, as a reminder, is limited to €3,000. For a non-resident, access to this status is subject to the same authorisation requirements as the incorporation of a company.

Comparative table of Andorran legal forms

How to choose the legal form suited to your project?

Since taxation is identical regardless of the structure, the choice comes down to a handful of operational criteria. Here are the questions to ask before deciding.

• What capital can you raise? Below €60,000, the SL is effectively the only option; the SA requires a more solid financial base.
• How many partners, and what profile? For a solo project, the SLU or the SAU are sufficient; for a round of investors, the SA, with its higher capital and formalised governance, is generally better suited.
• Do you intend to raise funds? The SA, structured in shares and equipped with formalised governance, is often preferred for arrangements open to outside investors.
• What governance do you want? The SL offers flexible management; the SA allows formalised governance with a board of directors.
• What exposure of your assets are you willing to accept? The SL and the SA protect your personal assets; the general partnership and operating in one's own name place them at risk.
• Are you anticipating a transfer or external growth? The SA form, or even a holding structure, can be calibrated in advance for these objectives.

In the vast majority of cases, the SL meets the need. The SA is justified when the project is capital-intensive, multi-shareholder, or intended to grow through outside contributions. A poorly calibrated choice at the outset can generate subsequent restructuring costs, hence the value of anticipating this decision with specialist advice.

Legal and tax obligations common to all forms

Whatever structure is chosen, several obligations apply identically. The articles of association must be drafted in Catalan and comply with Andorran law. Incorporation is formalised by an authentic deed signed before an Andorran notary, after which the deed is registered with the Companies Register, giving the company its legal existence. The company then obtains its NRT (Número de Registre Tributari), the equivalent of the French SIRET, which must appear on its invoices and official documents.

On the tax side, corporate tax is capped at 10% for all forms, and companies are subject to IGI, the Andorran equivalent of VAT. Each company must keep accounts in accordance with the Andorran chart of accounts and file its accounts annually with the Register. For the complete details of the administrative procedures, from the NIA to the business licence, see our dedicated guide to setting up a company in Andorra.

Frequently asked questions

Can an SL be converted into an SA after incorporation?

Yes, the transformation is legally possible. It involves an amendment to the articles of association, a notarial deed and compliance with the capital requirements of the SA, i.e. €60,000. This procedure remains rare in practice: the initial choice of structure deserves to be anticipated in order to avoid restructuring costs.

Do you need to be an Andorran resident to set up an SL or an SA?

No. Both forms are available to non-resident foreigners, subject to obtaining the prior investment authorisation issued by the Andorran government. Active tax residence is a separate process, which setting up a company may help to initiate, but it is not a prerequisite for incorporation.

Does the legal form have an impact on the company's taxation?

No. Unlike in France, the legal status has no bearing on taxation in Andorra. Whether you opt for an SL, an SA or a general partnership, corporate tax is capped at 10%. The choice of legal form is therefore made on operational criteria, not tax ones.

Do you need an Andorran notary to incorporate the company?

Yes. The signing of the deed of incorporation before an Andorran notary is mandatory for all forms endowed with legal personality. Most of the preparatory steps can be handled remotely, but at least one physical trip to Andorra is generally required to finalise the incorporation.

What is the minimum capital according to the legal form?

The minimum capital is €3,000 for an SL and €60,000 for an SA, both of which must be fully paid up upon incorporation. The general partnership and sole proprietorship impose no legal minimum capital, but they engage the personal assets of the partners or of the entrepreneur.

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