Ideal Legal Status For Your Business In Andorra

Published on October 4, 2025 and written by Cyril Jarnias

Andorra offers a highly attractive fiscal and legal framework for entrepreneurs. However, choosing the right legal structure for your business is a crucial decision that will have significant long-term implications. Here is a comprehensive guide to help you make the best choice based on your situation.

Main legal structures in Andorra: which suit for your business?

In Andorra, entrepreneurs can choose between several legal forms for their business. Each has specific advantages and disadvantages:

Public Limited Company (SA): the three-piece suit

Main characteristics: – Minimum share capital: €60,000 – Minimum number of shareholders: 1 – Liability limited to invested capital – Suitable for large-scale projects and publicly traded companies

The SA is the most formal and prestigious structure in Andorra. It offers great credibility with partners and investors, but also involves heavier administrative and accounting obligations.

Limited Liability Company (SL): the smart-casual suit

Main characteristics: – Minimum share capital: €3,000 – Minimum number of partners: 1 – Liability limited to invested capital – Flexibility and management simplicity

The SL is the most popular legal form in Andorra, particularly suitable for SMEs and individual entrepreneurs. It offers a good balance between legal protection and operational flexibility.

Sole proprietorship: in shirt sleeves

Main characteristics: – No minimum capital required – Single owner – Unlimited liability on personal assets – Administrative and accounting simplicity

The sole proprietorship is suitable for small activities and liberal professions. It allows for quick and simple startup but doesn’t provide separation between personal and professional assets.

Sole proprietorship or corporation: which side to choose for your Andorran adventure?

The choice between sole proprietorship and corporation depends on many factors. Here are the main elements to consider:

Advantages of sole proprietorship: lightness and simplicity

– Quick and inexpensive creation procedures – Simplified administrative and accounting management – Total flexibility in decision-making – No minimum capital required

Disadvantages of sole proprietorship: all eggs in one basket

– Unlimited liability on personal assets – Limited credibility with partners and clients – Difficulties raising funds or forming partnerships – Potentially less advantageous taxation

Advantages of corporations (SL or SA): protection and credibility

– Liability limited to invested capital – Better professional image – Ease in forming partnerships or raising funds – Possible tax optimization

Disadvantages of corporations: formality and costs

– More complex and costly creation procedures – Heavier administrative and accounting obligations – Less flexibility in decision-making – Minimum capital requirement

Generally, corporations (SL or SA) are recommended whenever the activity involves significant financial risks or requires substantial investments. Sole proprietorship is more suitable for small, low-risk activities or testing phases.

Key criteria for making the right choice: your legal compass in Andorra

To choose the legal structure best suited to your project in Andorra, ask yourself the following questions:

1. What is the scale of your project?

– Small local activity: sole proprietorship or SL – Large international project: SA

2. What are your financing needs?

– Self-financing: sole proprietorship possible – Significant fundraising: SL or SA recommended

3. What level of financial risk are you willing to assume?

– High risk: opt for a limited liability company (SL or SA) – Low risk: sole proprietorship may be suitable

4. How many people are involved in the project?

– Solo project: sole proprietorship or SLU – Multiple partners: SL or SA

5. What image do you want to project to partners and clients?

– Maximum professional image and credibility: SA – Balance between professionalism and proximity: SL

Steps to create your business in Andorra: the obstacle course (simplified)

Regardless of the chosen legal structure, here are the main steps to create your business in Andorra:

1. Obtain foreign investment authorization (for non-residents) 2. Choose and reserve a business name 3. Open a bank account in Andorra 4. Draft company bylaws 5. Sign the incorporation deed before a notary 6. Obtain the tax registration number (NRT) 7. Register with the commercial registry 8. Obtain necessary licenses and authorizations

The complete process generally takes between 2 and 3 months. It’s highly recommended to work with a local expert to efficiently navigate Andorran administrative procedures.