Creation of companies and societies

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Creation of companies and societies

Home（https://www.ccis.ad/en/） Creation of companies and societies

INFORMATION DOCUMENT FOR DOWNLOAD

Merchant company and enterprise in Andorra（https://www.ccis.ad/wp-content/uploads/2019/10/Merchant-company-and-enterprise-in-Andorra.pdf）

I - Legal system

II - Administrative authorizations

III - Fiscal regime

IV - Social and work permit regime

I - Legal system

MERCANTILE COMPANY

1. WHAT IS IT ?

It is a voluntary association of natural or legal persons who, through a commercial contract, contribute capital to collaborate in the exploitation of a business or professional activity.

The company can be a joint stock company (SA) or a limited liability company (SL). Any of them can be constituted by one partner (sole proprietorship) or more.

These companies have their own legal, distinct from the one of the partner or partners that make it up, from their registration in the Register of Companies.

2. SHARED CAPITAL

The minimum shared capital of the limited liability company is €3,000 and the joint-stock company’s is €60,000.

3. SOCIAL REGISTER

Andorran companies must have their registered office within the territory of the Principality of Andorra.

4. HOW IS A COMPANY ADMINISTERED ?

The general meeting of members is the sovereign body of the company and takes decisions on the most important issues of social life (modification of statutes, approval of the annual accounts, application of the result of the exercise, appointment and revocation of administrators, transformation, merger, split, extinction of the company, etc.). Agreements are taken by a majority of capital (which, at least, must mean one third of the share capital).

The General Meeting will appoint and determine the ordinary administration system of the company:

Sole administrator.

Joint administrators (joint action).

Solidarity administrators (individual action).

Board of Directors (collective action).

In a sole proprietorship, the powers of the general meeting are assumed by the sole shareholder.

5. PROCESS OF CONSTITUTION OF A COMMERCIAL COMPANY

Request for reservation of corporate name to the Government. Certification that will expire 6 months from its issuance and will produce, during its validity, a reservation of name in favor of future grantors of the deed (5.69 €).

Application to the Government for authorization of foreign investment, for foreign investments with a participation greater than 10% of the share capital.

Public writing. To set up the company, the public deed of incorporation of the company is granted by an Andorran notary.

For the registration of a limited company, you must pay €1,016.67 and an annual fee of €851.00 (if you do not have a commercial activity authorization, see section III.A.1 of this document). In the case of a limited company, €1,480.54 must be paid for registration and an annual fee of €935.50 (if it does not have a commercial activity authorization, see section III.A.1 of this document ).

The Registration is mandatory and the company will acquire legal personality from its registration.

Companies that carry out a commercial, industrial or service activity must be registered in the Trade and Industry Register.

INDIVIDUAL ENTREPRENEUR

1. WHO IS IT ?

A person of legal age, with free disposal of his assets, who carries out a business activity in his own name on a regular basis. Minors and incapacitated persons may trade through their guardians or legal representatives.

The economic rights of foreign natural persons who wish to carry out an economic activity in the Principality of Andorra are acquired by obtaining residence in the Principality.

2. WHAT IS YOUR RESPONSIBILITY ?

The individual entrepreneur is liable with all his present and future assets for the company’s debts. There is no separation between the patrimony of the company and the individual. In the event of a marriage, the assets of the spouse may be affected depending on the marital economic regime.

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II - Administrative authorizations

ADMINISTRATIVE AUTHORIZATIONS FOR THE EXERCISE OF COMMERCIAL, INDUSTRIAL OR SERVICE ACTIVITIES

Reservation at the Comú (Town Hall) of the commercial name.

Comú’s authorization: any natural person who wants to carry out a commercial, industrial or service activity needs an authorization from the local corporation where it is established.

The closure, the modification of economic activity, the change of owner of the establishment and the change of its name also require communal authorization.

Government authorization: the corresponding Municipality sends the request directly to the Trade and Industry Registry. The circumstances already described for the authorization to open a commercial, industrial or service establishment before the local corporations are subject to registration in the register.

In order to obtain the government authorization, the holders who request it must inform themselves in advance, at the respective Government departments, of the requirements in terms of health, environmental, accessibility, etc. that their establishments must comply with, in order for the government authorization to be granted to them. The cost of each registration in the Trade and Industry Register is €201.53.

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III - Fiscal regime

A. TAXES AND GOVERNMENT FEES

1. TAX ON THE REGISTER OF ECONOMIC ACTIVITIES OWNERS

The fact that generates this fee is the registration and permanence in the Register of Holders of Economic Activities, which is integrated by the Register of Mercantile Companies, the Register of Commerce and Industry and the Register of Liberal Professions.

The individual entrepreneur or the commercial company that carries out a commercial activity must be registered in the Trade and Industry Register, having to pay an annual fee for each authorized trade register of €214.21.

If they are patrimonial (family) companies or others that do not carry out any activity in the Principality, they do not need to be registered in the Trade and Industry Registry and must pay the corresponding annual fee in the Companies Registry, which is 935.50 € if they are limited companies or €851.00 if they are limited companies.

Mercantile companies must pay a fee at the time of registering the company in the Register of Mercantile Companies, which is €1,016.67 for limited companies and €1,480.54 for joint-stock companies. For the rest of the years, the annual fee to be paid, if the company is not registered in the Trade and Industry Register, is €851.00 for limited companies and €935.50 for joint-stock companies. And if the company is also registered in the Trade and Industry Register, it only has to pay the Trade and Industry Register fee, which is €214.21.

Taxpayers registered in the Register of Qualified Professionals, Colleges and Professional Associations must pay a fee of €426.40 for each authorized qualified profession.

2. INDIRECT I MPOSITION

Indirect general tax (IGI)

It is a consumption indirect tax of the delivery of goods and the provision of services by entrepreneurs or professionals, as well as the importation of goods.

The general tax rate is 4.5%. A super-reduced levy rate of 0%, a reduced rate of 1%, a special rate of 2.5% for certain operations provided for by the Law and an increased rate of 9.5% for operations are applied provided by banking and financial services.

3. DIRECT TAXATION

3.1 Corporate tax

A tax of a direct and personal nature for the income of legal entities in accordance with the rules established in the Regulatory Law. The tax period coincides with the financial year of the entity and cannot exceed twelve months. In the event that the social year is longer, the period ends after twelve months.

The tax base is calculated by correcting the accounting result. The general tax rate is 10%. The tax rate is the amount resulting from applying the tax rate to the tax base. A reduced tax applies to companies that exploit certain intangible assets. International double taxation on income attributable to permanent establishments located abroad is eliminated and deductions are established to eliminate domestic and international double taxation and for job creation and investments.

In September, taxpayers must make a payment on account of the settlement corresponding to the tax period that is in progress on September 1.

Corporation tax payers must have a tax registration number, which they must apply for if they do not already have one as indirect tax payers.

3.2 Personal income tax

It is a direct and personal nature tax for the income obtained by natural persons depending on its amount and their personal and family circumstances. The tax is levied on the taxable person’s income, understood as the entirety of his income and capital gains and losses, regardless of where they occurred and where the payer resides.

Natural persons are considered tax residents in Andorran territory in which any of the following circumstances occur:

A person who stays for more than 183 days during the year in the Andorran territory. To determine this period, sporadic absences are counted, unless the taxpayer proves his tax residence in another country.

That the main core or base of its activities or economic interests is located in Andorra directly or indirectly.

Workers who travel daily to the Principality from Spain or France and who have been hired by companies resident for tax purposes in Andorran territory or permanent establishments of foreign companies in Andorran territory are not considered tax residents in Andorran territory.

The tax domicile of tax-paying residents in Andorran territory is the one that derives from applying the rules provided for in the regulations governing the bases of the tax system.

In order to determine the bases of taxation and settlement and the calculation of the tax, income is classified into general income and savings income.