Setting up an SL in Andorra: capital, costs, process and tax

This timeframe remains an estimate: it varies depending on the complexity of the activity, the availability of documents, bank checks, the number of shareholders, and the foreign investment procedure.

The SL is a trading company with legal personality distinct from that of its shareholders: it has its own assets, enters into its own contracts, invoices its own clients, and takes on obligations in its own name. As a rule, the company's debts don't automatically become the personal debts of its shareholders.

This legal personality is acquired once the incorporation deed is registered with the Companies Register. The company name must include either SL or, with a single shareholder, SLU.

The SL describes a legal form, not a specific activity: it can serve an operating business just as well as, depending on its set-up, certain holding structures. That said, projects intended purely for holding shareholdings or wealth are better considered separately — see our holding company in Andorra and asset-holding company pages.

An SLU has the same legal personality and the same minimum capital as an ordinary SL: the sole shareholder simply exercises the powers normally held by the general meeting, and must formally document their decisions. When an SL held by several people later becomes a single-shareholder company, this needs to be registered with the Companies Register within one month — otherwise, the sole shareholder may become personally liable for debts incurred during the undeclared single-shareholder period.

This legal form generally suits small and medium-sized businesses whose capital and governance needs don't require a public limited company. It's commonly considered for:

• a consulting business;
• a communications or marketing agency;
• digital services or software development;
• a trading or distribution business;
• tourism or nautical activities;
• a family business;
• a licensed real estate activity;
• a service company serving an international clientele;
• the local subsidiary of a foreign group.

Some professions and sectors are regulated: they may require a specific authorisation, a recognised qualification, professional registration, or suitable premises. This needs to be checked before reserving the company name and drafting the corporate purpose.

Conversely, an SA may be more suitable for significant capital, multiple investors, or more institutional governance — €60,000 minimum capital, compared with €3,000 for the SL. A holding company or a asset-holding structure will be preferable where the main goal is holding shareholdings or organising family assets. See our full comparison of company types in Andorra.

The legal minimum capital is €3,000. It's divided into shares and must be fully subscribed and paid up: each shareholder receives a number of shares corresponding to their contribution and the percentage of capital set out in the articles of association.

The capital is paid into a bank account opened in the name of the future company "in formation". The bank then issues a certificate showing the amount deposited, the account number, how the capital is split, and the percentage held by each shareholder — a certificate to be given to the notary for signing the incorporation deed.

This capital is not a tax or a fee: it becomes an asset of the company. Once registration is complete and the account is released, it can be used to fund the company's business needs, provided the use is justified and properly recorded. It's important to distinguish the capital, which belongs to the company, from official fees paid to public authorities, and from the fees paid to professionals involved in the incorporation.

An SL can be owned by one or more individuals, one or more legal entities, Andorran residents, people based abroad, or a mix of both. A French, Spanish, Swiss, Belgian entrepreneur, or a national of another country, can therefore own an Andorran company — although their nationality or country of residence will affect the foreign investment procedure, bank checks, and international tax consequences.

Full ownership by a foreign individual or company is possible in principle. In that case, prior foreign investment authorisation is normally required. The exemption only applies to situations where the investor holds no more than 10% of the capital or voting rights and total foreign ownership stays below 25%. Beyond the 10% threshold, any later changes to the shareholding also remain subject to the authorisation regime.

The file may include, among other things, certified proof of identity, a criminal record certificate less than three months old, a recent CV, a precise description of the project and a business plan, the target market, the added value brought to Andorra, planned investment, financial forecasts, and evidence of the origin of funds. Foreign documents may require an apostille, legalisation, or translation depending on their country of issue.

For companies involving direct foreign investment, the law requires the business to carry out genuine economic activity within 18 months of incorporation. This is assessed based on, among other things, the opening of a trading operation, compliance with account-filing obligations, and consistency between the actual activity and the forecasts set out in the investment file. The business plan therefore needs to stay realistic and consistent with expected income, planned expenses, the premises chosen, and the target clientele — a newly incorporated company shouldn't remain a mere administrative shell with no real activity or oversight.

Official fees checked in August 2026. For a company with an open trading operation and activities registered with the Registre de comerç i indústria, the published annual fee is €214.21, to which municipal fees may be added. Where a company has no open trading operation or is asset-holding in nature, the published annual maintenance fee for an SL or SLU is €851 — two situations worth telling apart clearly. A proper quote should always separate the share capital belonging to the company, official fees, notary fees, professional fees, and annual running costs.

There's no single guaranteed timeframe for the whole process. For a standard project, it's sensible to plan for around two to three months between starting the file and beginning trading. The schedule depends, among other things, on the foreign investment authorisation, receipt of criminal record certificates, apostilles and translations, bank checks, the complexity of the shareholder structure, and the commercial opening procedure.

The statutory review period for foreign investment can run to two months, with a possible one-month extension. Once incorporated, the authorities also indicate a thirty-day period before certain registration documents can be collected, followed typically by two to three weeks for the commercial opening — stages that can overlap depending on how the file is organised. The quality and consistency of the documents remain the main lever for avoiding delays.

The company is organised around two bodies: the general meeting of shareholders and the management body — in an SLU, the sole shareholder exercises the powers of the general meeting. Management can be entrusted to a sole director, several directors acting jointly or with separate powers, or a board of directors; the set-up is chosen based on the number of shareholders, their roles, and the level of control desired.

When several people are involved in the project, the articles of association should anticipate the majority required for important decisions, a shareholder joining or leaving, the transfer of shares, situations of disagreement, signing powers, and the distribution of profits. Transfers of shares must be formalised by a notarial deed before an Andorran notary and recorded in the shareholders' register; the articles of association can include restrictions on free transferability, without making the shares practically untransferable.

The general corporate income tax rate is 10%, applied to the taxable result — determined from the accounting result after adjustments required by law, never on turnover. The general IGI rate, the local equivalent of VAT, is 4.5%; other rates apply depending on the goods, services and transactions involved.

An Andorran company doing business with France, Spain, Switzerland or other countries also needs to consider where services are actually carried out, the tax residency of its directors, the risk of a permanent establishment abroad, withholding taxes, double taxation treaties, and foreign VAT rules. Setting up an entity in the Principality doesn't automatically remove tax obligations existing in other relevant states — see our taxation in Andorra guide.

An SL needs ongoing management after incorporation: regular bookkeeping, retaining invoices and supporting documents, corporate tax and IGI filings, social security obligations with CASS, preparing and approving annual accounts, electronic filing, and keeping corporate registers up to date. Annual accounts must be approved within the first six months following the year end and filed electronically; signed accounting records must be kept at the registered office for six years. Failure to file can lead to publication in the BOPA, certain formalities being blocked, and a penalty of between €601 and €2,000. The company must also allocate 10% of its positive result to the legal reserve until it reaches 20% of the share capital.

Not every SL is subject to an annual audit: it becomes mandatory when, over two consecutive financial years, at least two of the following three thresholds are exceeded — total assets over €3.6 million, annual turnover over €6 million, or a headcount above 25 employees. Our accounting in Andorra service tracks these deadlines from the first year of activity.

No. Incorporating or owning a company doesn't automatically grant the right to reside in the Principality: the law makes clear that foreign investment alone doesn't create a right to residency, even when the investor is a director of the company.

For an active residency application involving self-employment through a company, the applicant generally needs to hold a shareholding above 34%, hold a position within the management body, provide effective management of the business, demonstrate that the company has a registered and active trading operation, and make a non-interest-bearing deposit of €50,000 with the AFA, unless an exemption set out in the regulations applies. These conditions relate to residency and shouldn't be confused with the mere rules for setting up the company.

• choosing a corporate purpose that's too broad, which complicates foreign investment approval, the bank, and the commercial opening;
• presenting unrealistic forecasts, disconnected from the stated resources and target clientele;
• starting the banking process too late, when KYC checks weigh heavily on the timeline;
• confusing the company with residency — being a shareholder or director doesn't automatically allow you to live and work in the Principality;
• using a bare address with no genuine organisation behind it, out of step with the activity carried out;
• overlooking tax obligations in the country of departure;
• setting up a company without starting the activity, when genuine activity must be demonstrated within 18 months;
• using overly generic articles of association, a common source of deadlock between shareholders.