Buying a company in Andorra
The interest of European entrepreneurs to settle in Andorra has been growing over the years. The reasons do not go unnoticed by companies seeking a legal and fiscal framework that allows them to operate with other countries of the European Union and the rest of the world in a clear and safe way. The Principality of Andorra, for years, has started an internal process to adapt to European regulations. It also allows the exchange of tax information with other countries offering transparency and commitment to international authorities. In addition, the creation or purchase of companies with foreign capital is viable and therefore definitely attracts foreign entrepreneurs.
Additionally, living in Andorra can have many advantages on a personal level. Among many of the characteristics of the Principality is that of having an enviable nature, a good health system and also a healthy and peaceful environment.
When evaluating the possibilities of moving to Andorra, it is logical to ask: How to obtain the nationality of the country? Is it possible to create a company in Andorra? Is it viable to rely on an existing company as a partner? Maybe buying a company in Andorra is the best option? Below we will give you an overview of the different possibilities to obtain an Active Residency and the legal and fiscal implications of each of them. You may be surprised.
1. Acquisition of / buying a (shelf) company in Andorra
As a foreign citizen, to obtain Andorran residency, you must own more than 20% of the company, in addition to actively participating in it. On a personal level there are certain requirements that you must also complete. But, as for the company, a strict protocol must be followed that includes, among other requirements, the following:
- Present a business plan and estimated billing forecast
- Approve the process of compliance with local banks (provide tax returns, source of funds, etc.)
- At least two visits during the incorporation process (notary, bank presentation)
These are just some of the steps that must be met. You should bear in mind that the approximate time of this process is about 3 months or maybe more depending on the case. It is possible to think that if you had opted for the option of creating a new company, the waiting time would be much longer. Well, it’s not like that. In fact, when buying a company in Andorra, it is recommended to do an accounting audit of the company to verify if there are debts to the treasury, creditors or any other abnormality that may hinder the operation of the company in the future. Also verify the origin of the capital used if the company is more than 8 years old, etc. All this could lengthen the purchase of an Andorran shelf company and logically, establishing a new company in Andorra does not require these tasks of “due diligence”.
2. Creating a new company in Andorra
The set-up of a new company in Andorra with foreign capital requires the same protocol explained above:
- Present a business plan and estimated billing forecast
- Approve compliance process with local banks (provide tax returns, origin of funds, etc.)
- At least two visits during the incorporation process (notary, bank presentation)
One of the parts that can suppose a headache is finding the space to establish the fiscal domicile. Well, there’s good news about it. There are Business Centers that offer offices with all the necessary services to develop your activity, at least the first years, until the need to grow leads you to look for a different space. As it is a space shared with other professionals, it fosters commercial and personal relationships among entrepreneurs, opening an interesting panorama in the integration with Andorran culture.
3. Participate in an existing company as a shareholder / partner
Partial participation in an Andorra company can be combined without problems with a tax residency in your own country. However, since taxation is done according to the country of residence, the rates corresponding to your country of residency will apply. But, if your tax residency was to be in Andorra, the situation changes drastically since the dividends of the company would be taxed at 0%. For this purpose, you could apply for an Active Residency as long as you meet the aforementioned requirements (participate with more than 20% in the company, and also be part of the board).
Definitely, living in Andorra makes the advantages multiply. Therefore, if you prefer the option of moving your residence to Andorra, the most advisable to start these procedures is to consult with specialists who can advise you in a professional manner and pour all their experience so that the investment in a company in Andorra is made in a satisfactory way and without delays.
To invest your capital in Andorra, a business plan must be provided, shareholders with more than 10% of the company must inform about their tax residence, they must also present a document from the police / Ministry of Justice of their country of origin with criminal records and, among other requirements, pass through compliance with local banks by providing tax returns, origin of funds etc.