Advantages and disadvantages of creating a company in Andorra - PSF Consultoría empresarial

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Advantages and disadvantages of creating a company in Andorra

It is normal for an foreign entrepreneur not to know the real advantages and disadvantages of starting a business in Andorra. Moreover, he may have the wrong think that Andorra is a tax haven. This is a very big error since the legislation has changed a lot.


The times of fiscal decontrol are over. The Government nowadays follows the path of a modern country and adapted to international law. There are tax advantages, but always appropriate to the legality recommended by international organizations such as the OECD. In the current framework, the creation of a company in the country has many legal advantages that can be very interesting in certain situations.



Pros and cons of creating a company in Andorra

Regarding the advantages, the country is under many of the regulatory frameworks of the EU. The objective is the association agreement with Europe and that leads to a growing convergence. The official currency is the Euro, which makes the ECB the country's monetary regulator. In addition, it is also responsible for monitoring the banking system through the AREB.


Regarding the disadvantages, the main one is that the system is quite slow in general. Any procedure usually requires more time than in other European countries. For example, the constitution of a company with foreign investment can take between six and eight weeks. In addition, the legal system is very similar to Spanish when it comes to creating a company, for good and for bad. For someone from Spain there will be no notable differences, but for someone accustomed to the legislation of other European countries the subject can be quite surprising.


On the tax advantages, Andorra has lower rates than Spain or France. The IGI, tax equivalent to VAT, stands at 4.5% at its maximum rate. This percentage is far from 21% Spanish or 20% French.


Both income tax and corporate tax have a maximum rate of 10%. In addition, the list of deductible expenses in Andorra is much higher than in its neighboring countries, so savings are greater. Also, the Andorran Treasury's inspectors is not so interested to look with magnifying glass and fundraising spirit as those of Spain and France. That is, they are not going to check up to the last coffee bill in search of a fine. Of course, this does not mean that consent fraud.


In summary, when creating a company in Andorra we find pros and cons. Depending on the situation, the option to create it can have a number of benefits high enough to be very attractive and it is a matter of weighing each case.


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