Banking

As of today, you’ll find 5 banking institutions within the country. Each of them are available to the general public and are accepting new individual accounts along with business banking clients. You can choose from the following banks:

• Andbank
• Banc Sabadell d’Andorra
• Credit Andorra
• Morabanc
• Vallbanc

Every bank listed above is national and domestically owned. They mainly serve private and consumer banking needs for the Andorran population and local businesses. In the years prior, offshore banking was very important to the Andorran economy. However, with the exchange of information treaties, those offshore positions have reduced.

The banks offer a full range of banking services including loans and credit, asset management and financial consultancy, operations with liabilities, financial analysis and other services (credit cards, transfers, etc.). They also have specialized subsidiaries of financing, insurance and asset management firms.

One of the challenges for the Andorran banks is to continue improving client services, both through face-to-face and remote channels. Since 2014, Andorran banks have spent up to 120 million euros in promoting digital transformation mainly to adapt to changes in their customers’ habits and to deal with the new challenges arising. The increase in the number of digital users in the country’s five financial institutions has soared by 45.7% in the last five years. Also noteworthy is the spectacular growth experienced by users of mobile applications, with an increase of 356.8%. Among the banking transactions that can be carried out over the Internet, those that have grown the most over the last few years are money transfers and transactions in securities.

TAXATION 

Historically considered a tax haven, Andorra, even today boasts a tax structure that remains attractive to foreign investors from all around the globe. However, nothing denies the fact that we’ve gone from being a tax haven to a “tax friendly” country, fully homologated by OECD.

Annual income tax in Andorra ranges from:

• 0 % from 0 € to 24,000 €
• 5%  of what exceeds from 24,000 € to 40,000 €
• 10%  of what exceeds from 40,000 €

It should be noted that there are many exemptions expected in the law of income taxes. Among others, dividends and incomes from Andorran companies (SL, SA, SICAV, UCIs or FUNDS) are not taxable and neither are the revenues from the products of equity securities.

Company formation 

Andorra is home to a well-developed free market economy propelled by finance, retail, and tourism. With generously low corporate taxation and some of the most friendly offshore investment policies, it goes without saying that Andorra is one of the best places in the world for those looking to register a company overseas.

Before you begin the process of incorporating your company in Andorra, there are some things you should consider:

• You’re going to have to decide on what type of company you want to register.
• Expect to incur various fees when going through the entire process.
• You will need to meet a few regulatory requirements for documenting your identity and also your company’s AoA.
• If you are a foreigner (not a resident of Andorra), expect to go through a few extra formalities when registering your company.

Societat Limitada (S.L.) or Societat Limitada Unipersonal (S.L.U.)

This corporate structure is ideal for small businesses — it’s very similar to what’s commonly known as a Limited Liability Company. Note that while S.L. and S.L.U. are very similar in terms of how they operate, the latter (Societat Limitada Unipersonal) has only one shareholder. Hence the word “unipersonal” is used. The same applies to Societat Anònima Unipersonal (S.A.U.) companies.

• Minimum capital share: €3,000
• Shares are called “Participacions”
• Can be sole-owned, in this case, the U as Unipersonal must be added to the name.
• Incorporation Tax: €1,016.67
• Annual Registry Tax: €851.00

Societat Anónima (S.A.) or Societat Anònima Unipersonal (S.A.U.)

S.A. companies are typically suited for much larger companies that have multiple shareholders. The most notable difference between S.L. and S.A. companies is the requirement of capital — upwards of 60.000 € is required for the latter.

• Minimum capital share: €60,000
• Shares are called “Accions”
• Can be sole-owned, in this case, the U as Unipersonal must be added to the name.
• Incorporation Tax: €1,480.54
• Annual Registry Tax: €935.50