Published on and written by Cyril Jarnias
For years, the idea has circulated in European entrepreneur circles: set up a company in Andorra “with one click,” benefit from light taxation, while continuing to live in Barcelona, Toulouse, or Lisbon. On paper, it looks like the perfect combo. In practice, Andorra’s legal framework is much more demanding than one might imagine, especially regarding the famous “economic substance.”
Creating a company in Andorra remotely is possible, but its tax and banking viability depends on compliance with laws, banking requirements, and new substance rules, which significantly nuances the usual marketing pitch.
What Andorran law (really) allows for non‑residents
Before talking about distance and digital, one key point must be clarified: Andorra does not condition the creation of a company on the founder’s residence. It is written in black and white in the legislation.
A non‑resident foreign national can: open a bank account, buy real estate, invest in local businesses, obtain a long‑stay visa, work under certain conditions.
– set up an SL (Societat Limitada) or SA (Societat Anònima),
– hold shares in an Andorran company,
– act as manager or director.
In other words, nothing legally prevents a non‑resident from being a shareholder and director of an Andorran structure. Setting up a company without living there is therefore legally possible.
But this freedom immediately runs into two sets of constraints: the foreign investment regime and substance requirements.
As soon as a non‑resident‘s stake exceeds 10% of capital or voting rights, prior foreign investment authorization is mandatory. This FIA is issued by the Andorran Financial Authority (AFA) or by the government, depending on the case.
This authorization:
– applies to the initial setup as well as to subsequent capital increases,
– concerns non‑resident individuals, but also foreign companies or entities with foreign capital,
– does not apply below the 10% threshold.
In practice, for a foreign entrepreneur who wants to control “their” company, this formality is almost systematic. The FIA file is far from symbolic: you must provide a passport, criminal record extract, proof of lawful origin of funds, detailed business plan, CV, sometimes tax returns from recent years, bank statements, etc.
The theoretical timeline is around a few weeks to two months, with a real risk of rejection in case of a vague file or an artificial‑looking project.
A creation process still largely in‑person
Officially, Andorra is modernizing its procedures. The e‑tràmits portal already allows online filing of:
– the request to reserve a business name,
– the foreign investment authorization request.
Digitalization does not eliminate key physical steps, even though it transforms processes.
– opening a bank account at an Andorran bank,
– depositing the share capital (€3,000 for an SL, €60,000 for an SA),
– signing the incorporation deed before a notary in Andorra,
– local procedures for the commercial license and CASS registration (social security).
On these points, the presence of at least one representative (partner or authorized agent with a properly legalized power of attorney) remains necessary. In theory, some notary offices can work with apostilled powers of attorney prepared remotely. In practice, banks, notaries, and the administration want to see the real decision‑makers at least once, especially in a highly regulated post‑money laundering environment.
Conclusion: part of the process can now be done remotely, but talking about 100% online creation would be misleading.
Economic substance: the end of Andorran “letterbox” companies
The decisive point for whether a “remote” setup holds water is not just the legal possibility of incorporating the company, but its ability to prove real activity on the ground.
Andorran authorities have toughened their stance: the Principality wants real businesses, not empty shells for purely tax purposes.
The three pillars of substance
To be considered legitimate, an Andorran company must demonstrate three types of substance:
– 1. Physical infrastructure
– a registered address in Andorra that is not simply a PO box;
– a real premises suitable for the activity (office, shop, space in a business center);
– an electricity meter in the company’s name, an internet connection, and even a fire extinguisher maintenance contract.
A space of about 20 m² is considered the minimum for most commercial activities.
– 2. Human resources
– if the director does not reside in Andorra, the company must have at least one employee registered with CASS, with a real employment contract;
– this employee cannot be a simple figurehead: they must hold a position consistent with the declared activity.
– 3. Effective management
– management decisions must be made from the Principality;
– the ideal director is an Andorran tax resident (over 183 days on site) and active in running the business;
– key meetings, major signatures, banking relationships, and clients must be traceable to Andorra.
These requirements aim not only to meet international standards (OECD, EU), but also to crack down on “shell company” setups actually managed from France or Spain.
Inspections and penalties
Authorities no longer hesitate to check company compliance, especially during:
– renewals of residence permits (at 2 years and then 5 years),
– license applications or major modifications,
– targeted checks by the Department of Commerce or the tax administration.
In case of non‑compliance with substance requirements:
– fines of up to €12,000 are possible,
– refusal or revocation of commercial licenses can occur,
– non‑renewal of residence permits may happen,
– foreign tax authorities (e.g., in France) may re‑characterize the company as effectively managed from their territory, leading to tax adjustments, full taxation of profits in France or Spain, and penalties.
A 100% remote setup, without real presence or effective management in Andorra, is therefore extremely risky.
Faced with these constraints, many entrepreneurs wonder if they can register their company at their home or use a business center with a “virtual office.” The answer depends on the type of structure and the degree of real presence.
Registration at a home in Andorra
If the manager resides in Andorra, they can in principle register their company at home, provided they:
– set aside a room clearly dedicated to professional activity,
– separate this room from living spaces (no kitchen, no bedroom),
– be able to receive clients or suppliers there if necessary,
– comply with safety rules (electricity, fire extinguisher, etc.).
Inspections can ask very concrete questions: “Where do you receive your clients? Where do you work?” The credibility of the setup is therefore decisive.
Excerpt from the regulations
Andorran business centers offer several levels of service:
| Type of solution | Main content | Possible usage |
|---|---|---|
| Shared physical office | Workstation, regular access, shared services | Suitable for an operational company, partially meets substance requirements |
| Private office | Dedicated space, utilities in company’s name | Ideal for demonstrating substance, especially for a service activity |
| Simple virtual office | Business address, mail reception, a few hours of meeting room | Insufficient for a standard commercial activity, sometimes acceptable for a pure holding company |
“Virtual office” packages (prestigious address, mail reception, call forwarding) are useful as a showcase, but do not legally replace a real establishment for an operating business. Andorran authorities have reminded: simply having a business center address, without an effectively used space or local resources, is not enough to meet substance requirements for a commercial company.
However, for a pure holding company (whose purpose is limited to holding stakes), authorities may be more flexible, provided that:
– the structure serves to manage substantial holdings,
– management decisions are effectively made in Andorra,
– financial flows are consistent with the holding role.
Andorran taxation: real attractiveness, but strict conditions
If Andorra attracts so many entrepreneurs, it’s not just for the lifestyle: the tax system is, frankly, “rational” and competitive, without being a tax haven as defined by the OECD.
Andorran company: corporate tax capped at 10%
Andorran companies are subject to corporate tax (CT) at a standard rate of 10% on profits generated in the Principality. However, there are preferential schemes:
– new companies: possibility of a reduced rate of 2% for the first financial year under conditions (if registered office and effective management are in Andorra),
– international trade activities: certain income from international activities may also benefit from a 2% rate,
– holdings: exemption regime (participation exemption) for dividends and capital gains from qualifying subsidiaries.
In the case of holdings, dividends received from foreign subsidiaries and capital gains from the sale of such shares can be 100% exempt if several criteria are met (level of participation, minimum taxation of the subsidiary, holding period).
Dividends paid by an Andorran company to its partners benefit from a 0% tax in Andorra, with no withholding tax or local source deduction.
Individuals: personal income tax capped at 10% and no wealth tax
For Andorran tax residents, personal income tax (IRPF) works by brackets:
| Taxable income bracket | Applicable rate |
|---|---|
| Up to €24,000 | 0% |
| From €24,001 to €40,000 | 5% |
| Over €40,000 | 10% |
Notable features:
– dividends of Andorran origin are exempt from IRPF,
– capital gains on financial instruments (especially listed shares) are taxed at 0% for residents,
– there is no wealth tax, inheritance tax, or gift tax,
– the local VAT (IGI) is 4.5%, well below French or Spanish levels.
In practice, an Andorran resident who earns a moderate salary and pays themselves mainly through dividends from their own company may end up with a very low overall tax burden, provided they strictly meet the residence (183 days) and substance criteria.
Non‑residents: taxation limited to Andorran source
For non‑residents, Andorra applies a non‑resident income tax (IRNR) at 10% on income from Andorran sources. But this scheme needs significant nuance:
The tax regime for non‑residents in Andorra provides exemptions for employment income and variable taxation for capital gains.
Employment income of cross‑border workers is exempt from IRNR, taxed in their country of residence. Income from movable capital (interest, dividends) is largely exempt.
Dividends from Andorran companies paid to non‑residents are exempt. Capital gains on the sale of stakes are subject to a 10% rate, unless exempted under conditions relating to participation, company type, or holding period.
In any case, the non‑resident remains taxable on their income (management fees, dividends, capital gains) in their country of residence, according to domestic law and applicable tax treaties. Opening an Andorran company without becoming an Andorran tax resident does not magically turn a French or Spanish resident into an “invisible” taxpayer.
A territorial system for non‑residents
Another important nuance: Andorra applies, for non‑residents and non‑resident companies, a principle of strict territoriality. Non‑resident entities or non‑resident individuals are only taxed on income generated within the Principality. This is attractive, but does not protect against taxation in the country of residence.
Andorran company without being a resident: profitable setup or false good idea?
Let’s return to the key question: is it worth setting up a company in Andorra remotely without a plan for tax residence there?
Taxation: the main benefits are for residents
The main Andorran tax advantages are designed for those who become tax residents:
– tax capped at 10% on worldwide income, with exemption of the first significant bracket,
– Andorran dividends at 0% for the resident beneficiary,
– complete absence of wealth tax, inheritance tax, and gift tax,
– stock market capital gains exempt.
For a non‑resident, the company benefits from a 10% CT (sometimes 2%), but the director’s personal income is generally taxed in their country of residence.
Substance and risk of re‑characterization by France or Spain
A French or Spanish entrepreneur who:
– lives all year in their country,
– creates an SL in Andorra,
– has no premises, no employees, no effective management in Andorra,
– but invoices their clients through this structure,
takes a serious risk that their tax administration will consider that:
The company’s place of effective management being located in France or Spain, the profits must be taxed as if they had been earned by a French or Spanish company, since the Andorran company is merely a “letterbox” with no economic reality.
Possible outcome: heavy tax adjustment, penalties, and in some cases criminal prosecution.
Banks: suspicion toward companies without substance
Andorran banks, for their part, have increasingly strict requirements:
– certified bylaws,
– publication in the BOPA,
– AFA authorization,
– identification of all beneficial owners,
– proof of source of funds over 12 to 24 months,
– realistic and consistent business plan,
– clarification of client and supplier countries.
A company created on paper, without a real office, without a clear economic project, with partially declared beneficial owners or evasive answers, has a high chance of being outright rejected by banks, which have no obligation to provide a reason.
How does a company creation actually proceed?
Even if it is possible to outsource a large part of the process to a local firm, the sequence remains relatively heavy.
The main steps for creating an SL or SA
Simplified, creating an Andorran company follows a typical pattern:
| Step | Content | Indicative timeline |
|---|---|---|
| 1. Name reservation | Propose 3 names, check availability | 5‑10 days |
| 2. FIA (foreign investment) | Complete file to government or AFA if >10% foreign capital | 3‑8 weeks |
| 3. Bank account opening | Bank compliance, business plan, KYC/UBO | Variable, often several weeks |
| 4. Deposit of share capital | €3,000 for SL, €60,000 for SA (partial payment possible for SA) | Immediate after opening |
| 5. Drafting of bylaws | In Catalan, with corporate purpose, registered office, capital, governance | 1‑2 weeks |
| 6. Signature before notary | Deed of incorporation, certification of bylaws | By appointment |
| 7. Registration in the Companies Register | Registration and issuance of NRT (tax number) | 1‑3 weeks |
| 8. Municipal / commercial license | Activity authorization from the Comú | 2‑6 weeks |
| 9. CASS registration | Enrollment of the company and employees | A few days |
Depending on the project’s complexity, reasonably allow 3 to 4 months for a company to be fully operational. Some steps (name, FIA, capital deposit) can be orchestrated remotely via a firm, but key moments (bank, notary, inspections) require personal involvement.
Costs and annual fees
Beyond the share capital, several items must be included:
Incorporation fees (lawyer, notary, intermediaries) can reach over €10,000 depending on the level of service.
Creating a company “just to see,” without a solid project and without a real intention to establish oneself there, makes little sense in this context.
Tax residence and company: two paths not to be confused
Another common confusion is believing that creating a company would suffice to become an Andorran tax resident, or conversely that becoming a resident would suffice to benefit from the company’s advantages. In reality, these are two very distinct processes.
Creating a company without becoming a resident
As we have seen, this is legally possible:
– no obligation for the founder to reside,
– possibility of being a non‑resident manager,
– taxation of the company on its Andorran profits (10% or 2% depending on the case),
– no withholding tax on dividends.
But:
– dividends, salaries, and capital gains received personally remain taxable in the country of residence,
– the credibility of the setup depends on substance in Andorra,
– banks and foreign authorities scrutinize “exotic” structures without substance.
Becoming an Andorran tax resident and developing your activity there
The real “Andorran package” begins when you consider tax residence:
– actual presence of at least 183 days per year (for active entrepreneurial residence),
– establishment of the center of economic and vital interests in Andorra,
– significant participation in the capital of a local company (often >34%) and a director role,
– housing rented or purchased in the Principality,
– CASS registration as a self‑employed worker or manager,
– compliance with international transparency rules (CRS, automatic exchange of information, etc.).
The different forms of residence (active entrepreneur, passive wealth, digital, etc.) each have their own conditions (AFA deposit, amount of local investment, minimum stay duration), but all rest on the idea that the resident must maintain a real, lasting, and verifiable connection with Andorra.
What about “100% online” creation like Estonia?
Other micro‑states or small countries have bet on hyper‑digitalization of business life. Estonia has become the reference with its e‑residency and the ability to create and manage a company entirely remotely, while remaining a tax resident elsewhere.
Andorra has not taken this path. The country has chosen a different path: gradual openness, alignment with European standards (association with the EU, customs agreements, monetary agreements), banking transparency, but no “digital PO box” like the Baltic model.
Many procedures are carried out via online portals (e‑tràmits). Electronic signature is governed by a precise legal framework, with three levels (simple, advanced, qualified) following the European model. However, exceptions remain.
– fundamental acts of corporate life (incorporation, capital increase, real estate transfer, etc.) must still go through a notary in person,
– authorities place great importance on physical presence and the reality of activity,
– purely virtual companies are clearly in regulators’ sights.
For an entrepreneur seeking a “100% remote European company without residence,” Estonia, Cyprus, the UK (for creation), or even some US states better fit that logic. Andorra’s project, on the other hand, is to build a tax‑competitive environment for companies genuinely established on its territory.
So, is it “really possible” to create an Andorran company remotely?
It all depends on what is meant by “remotely.”
What is possible
– Build most of the file from abroad: prepare bylaws, collect documents, file name request and FIA online, communicate with the bank.
– Delegate a good part of the procedures to a specialized firm: draft business plan, prepare forms, follow up with authorities.
– Remain, in some cases, a non‑resident while being a shareholder and director of an Andorran company, especially for holding activities or more patrimonial investment structures.
What is not possible (or no longer)
– Create an Andorran “shell” without a real office, without an employee, and continue to manage everything from France or Spain hoping to stay invisible: this model is now highly exposed.
– Open an Andorran bank account in the company’s name without traveling or accepting a full interview about the source of funds, nature of activity, beneficial owners, and target markets.
– Build serious tax planning while remaining a tax resident in a high‑pressure country, without complying with substance criteria and tax treaties.
The real question to ask
Rather than asking whether you can “create in Andorra remotely”, the right question is:
Am I ready to truly anchor part of my personal and professional life in Andorra (residence, office, team, clients), or am I only looking for an exotic address to reduce my taxes without changing my reality?
Question for a business owner
In the first case, Andorra can offer a rational, stable tax framework, with CT capped at 10%, powerful regimes on dividends and capital gains, no wealth tax, and gradual access to the European market. In the second case, the Principality has become one of the least welcoming environments for purely artificial setups.
Yes, you can initiate and steer an Andorran company project remotely, but since 2020, a simple structure without real presence is no longer enough. Andorra is no longer an offshore tax shelter: for entrepreneurs ready to play the substance game and often to relocate, it remains one of Europe’s most interesting jurisdictions.
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Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.
On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.
Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.
