INFORMATION DOCUMENT FOR DOWNLOAD
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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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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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 IMPOSITION
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.
Considered as general income: from work, from economic activities and from real estate capital. Considered as income from savings: from movable capital, capital gains and losses.
Net income is obtained by the difference between computable income and deductible expenses. Capital gains and losses are generally determined by the difference between the transfer and acquisition values.
The various incomes are integrated and compensated according to their origin and their classification as general or savings income.
The result of these operations determines the general taxation base and the savings.
The general settlement base is the result of reducing the positive balance of the general taxation base by the amount of the reductions provided for in the Law (personal and family reductions, reduction for investment in habitual residence and reductions for contributions to pension instruments social security and compensatory pensions).
The settlement basis of the savings is determined by reducing the positive balance of the tax base of the savings by the amount of the reduction provided for in the Law (minimum exempt reduction).
The general tax rate is 10%. The tax quota is the sum of the amounts resulting from applying the tax rate on the positive balances of the general settlement and savings bases, respectively.
The settlement quota is the result of reducing the tax quota by the amount of the bonus provided for by law and by the amount that results from applying the deductions provided for in the law (deductions to eliminate internal double taxation, deduction to eliminate international double taxation and deduction for job creation and investments).
Taxpayers who have obtained income from work, income derived from economic activities or income from real estate capital will deduct from the tax quota a bonus of 50 % of the amount that results from applying the tax rate of tax on the amount of the general taxation base of the taxpayer, reduced by the amount of 24,000 euros corresponding to the reduction provided for in the law. This bonus cannot exceed the amount of 800 euros.
The taxpayer must present and sign the declaration between April 1 and September 30 of the year following the end of the tax period.
However, taxpayers who only obtain income from any or all of the following sources are not required to submit the declaration: income from work, income from movable capital and exempt income. In any case, taxpayers who have received income from work or income from movable capital that have not been subject to the obligation to make payments on account in accordance with what is established by law are obliged to submit and sign the declaration.
3.3 Tax on the income of tax non-residents
A direct tax for the income obtained in the territory of the Principality of Andorra by natural or legal people who are not tax residents in this territory.
Individuals and legal entities not tax resident in the Principality of Andorra who obtain income that, in accordance with this Law, is considered generated in this territory are liable to pay this tax.
They are jointly and severally liable for the tax debt:
- the payer of the returns accrued in favor of the taxpayers who operate without the mediation of a permanent establishment
- the depositary, the representative or the manager of the assets or the rights of the taxpayers who operate without the mediation of a permanent establishment.
Non-resident tax payers are obliged to appoint a natural or legal person with residence in Andorra, to represent them before the ministry in charge of finances in relation to their obligations for this tax when they obtain income through a permanent establishment or when required the ministry in charge of finance.
For income obtained by non-resident tax payers through a permanent establishment, the tax rate is 10%. There are deductions from the tax rate. The tax period must coincide with the financial year declared by the permanent establishment, without exceeding 12 months.
For the income obtained by non-resident tax payers without the mediation of a permanent establishment, the general tax rate is 10%; when it comes to returns derived from reinsurance operations, 1.5%, and when it comes to income paid as a fee, 5%.
They are exempt from tax, among others: income from work, income from movable capital, earnings from shares or participations in Andorran companies (as long as the participation does not exceed 25% of the capital) and derived from the transfer of shares or participations in collective investment bodies.
The tax is due:
- If it is returns, when they are due or on the date of collection if this date is earlier.
- In the case of patrimonial gains, when the patrimonial alteration or transmission takes place.
- In all other cases, when the corresponding income is due.
B. TAXES AND MUNICIPAL FEES
1. TAX OF REGISTRATION OF COMMERCe, BUSINESS AND PROFESSIONAL ACTIVITIES
A communal tax levied on the exercise of a commercial, business or professional activity carried out in the territory of a parish. The tax obligation falls on the person (natural or legal) who is the holder of the administrative resolution that authorizes the exercise of economic, commercial, business or professional activities.
The communes tax this activity taking into account the type of activity, the location of the business and the surface area of the establishment.
2. REGISTRATION RIGHTS FEE
It is a communal tax levied on the authorization of the establishment of a trade, industry or professional activity in the territory of the parish and/or the change of establishment or administrative owner. The amount of the fee varies according to the parish concerned.
3. TAXES FOR PROVISION OF SERVICES IN CONCEPT OF PUBLIC LIGHTING, PUBLIC HYGIENE, ETC
Persons holding an authorization to establish a commercial, business or professional activity must pay annual parish fees for these services that vary according to the commune. It is generally a percentage of a trade’s registration authorization fee.
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SOCIAL REGIME AND WORK PERMIT
Membership in the Andorran Social Security (CASS) is mandatory for all salaried, assimilated workers and for self-employed workers. The contribution of salaried and similar insured persons carries a burden of 6.5% for the employee and 15.5% for the employer. In cases where, in accordance with the law, they only quote in the general branch, it entails a burden of 3% for the employee and 7% for the employer.
For self-employed workers, it entails a burden of 22% of the result of applying to the overall average monthly salary quoted by the set of salaried people in the CASS of the immediately preceding calendar year, some percentages depending on the net income from activities economic and/or turnover. In cases where, in accordance with the law, they only contribute to the general branch, the contribution percentage is 10% of the result of applying to the overall average monthly salary contributed by all salaried people in the CASS of the calendar year immediately preceding, some percentages depending on the net income from economic activities and/or the business figure.
Every foreigner who works in the Principality must have a work permit. Once hired by a national company, it must process the corresponding permit with the Ministry of the Interior. The granting of permits by the Ministry is subject to a fee.
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Note : The present content is purely informative and does not constitute any legal basis
