Not only is Andorra stunningly beautiful, but this tiny principality is also home to the lowest corporate tax in Europe.
Andorra
Found hidden away in the Pyrenees mountains between Spain and France. Andorra is renowned worldwide for its breathtaking mountainous landscape.
Andorra has a highly thriving economy, with 80% of its GDP accounting for tourism. Andorra is widely regarded as the best place to start a business, as it has the lowest corporate tax in Europe. It also has the lowest business costs in Europe.
Why Open a Business in Andorra?
Andorra has a highly thriving economy, with 80% of its GDP accounting for tourism. Andorra is widely regarded as the best place to start a business, as it has the lowest corporate tax in Europe. It also has the lowest business costs in Europe.
Andorra is a country that has gone from being considered a tax haven to a very transparent country with a very low tax burden. This has attracted many foreign investors who have seen the Principality as one of the most attractive countries in Europe.
Apart from the tax advantages, which are clearly the most attractive reason for investors, there are other advantages to take into account. The Principality is located in a privileged environment, has a good health system, is well communicated, has a magnificent educational system and is considered one of the 5 safest countries to live in.
Points to Keep in Mind When Opening Your Business in Andorra
The first thing to do is to decide the type of company you want to open in Andorra:
Business: In a business, there can be several owners
Company: They can be public limited companies, private limited companies or both sole proprietorships.
The difference between the two types lies in the degree of liability. In a company you are only liable with the share capital, in a business (self-employed) you are liable with all the assets of the entrepreneur.
In terms of accounting and tax obligations there are also certain differences:
Taxes in Andorra
IGI: this is an indirect tax. It taxes consumption through the taxation of the transfer of goods and the provision of services by entrepreneurs and professionals, as well as imports of goods.
Corporate income tax (IS): this is a direct tax of a personal nature. It taxes the income of legal entities in accordance with a series of regulations that you can consult here.
Personal Income Tax (IRPF): this is a direct tax of a personal nature. It taxes the income obtained by individuals according to the amount and personal and family circumstances. It takes into account all capital gains and losses, regardless of the place where they have occurred and the residence of the payer.
IRNR (income tax for non-tax residents): This is a direct tax. It is levied on income obtained in Andorran territory by individuals or legal entities that are not tax residents in this territory.
Necessary formalities You’ll Need to Take into Account
The incorporation process can be complex if you do not have fiscal and legal knowledge. The steps to follow are:
For Individuals:
- Reservation of a trading name.
- Application to open a business or industry.
- Registration with the Social Security (Cass) for the self-employed person/s and also for their employees.
For Companies:
- Reservation of company name.
- Drafting of articles of association.
- Public deed of incorporation of the company before an Andorran notary.
- Registration in the register of companies.
- Companies that carry on an industrial or service activity must be entered in the register of commerce.
- Registration with the Social Security (Cass) for the administrators and also for their employees.
- These steps, in the case of foreign investment, are the same as for foreign direct investment applications.
There are also procedures that, although not necessary, are very useful when opening a company in Andorra:
- Application for a digital certificate at the Cass.
- Application for a digital signature at Tributs.
A very helpful office that can assist you in these processes is Andorra Tarinas, who can advise you on how to carry out these two procedures to avoid unnecessary journeys and thus save time.
In addition to being one of the countries of the European Union with the lowest corporate tax, it offers lower costs for the company at a European level.
The rental prices of premises go from €400, and other costs such as external professionals or consumables (fuel, electricity, etc.) are very competitive compared to other countries in Europe.