Doing Business In.. 2020 Comparisons

Last Updated July 15, 2020

Contributed By Cases & Lacambra

Law and Practice


Cases & Lacambra is the leading business law firm in the Principality of Andorra, and has a marked international character. It seeks to offer the best comprehensive advice in business law for local and international players. Since its foundation, the firm has had a solid, recognised and highly tested track record in its jurisdiction, in both national and cross-border banking matters, including the regulation of financial markets, corporate and debt transactions, special situations and asset recovery. The firm has also had a market-leading tax practice since 2016. The firm's highly qualified professionals have very marked methodologies and are oriented to satisfy the needs of the most demanding international institutional and private clients.

Civil law, or continental law, is the legal system that governs the Principality of Andorra (Andorra). With a Roman-based substratum, which is still present in some legal forms or structures, the sources of the Andorran legal system are laws, customs and the general principles of law.

Contrary to other neighbouring countries, the civil law system of Andorra is not codified.

The Constitution is the supreme law of Andorra; it was adopted in 1993 and is considered one of the major milestones in the country’s history.

Treaties and international agreements take effect from the very moment of their publication in the Andorran Official Gazette.

Domestic legislation consists of acts that are adopted by the Andorran Parliament (Consell General), which may delegate the exercise of the legislative function to the Andorran Government (Govern d’Andorra). Such an act of delegation must determine the matter and the scope delegated, the principles and directives under which the corresponding legislative regulations of the Government are to be issued, and the timing of its exercise.

As far as the judicial order is concerned, the Andorran judicial system is governed by the General Superior Council (Consell Superior de Justícia), which is composed of five members.

The Andorran judiciary system is organised into four jurisdictional orders, which are each composed of a civil section, a minors’ section, a criminal section and an administrative section.

The Andorran judiciary system can also be organised into different levels, with the High Court of Justice (Tribunal Superior de Justícia) being the highest judicial body in Andorra. Composed of three chambers (Civil, Criminal and Administrative), it has cognisance of all jurisdictional orders and its rulings cannot be appealed, except to the Constitutional Court (Tribunal Constitucional), when one of the parties claims that their constitutional rights have been infringed.

The Constitutional Court is not considered to be part of the Andorran judiciary system since it acts as an independent part of the Andorran state and its sole responsibility is the interpretation of the Andorran Constitution.

Pursuant to Law 10/2012, June 21, on Foreign Investment in the Principality of Andorra (Llei 10/2012, del 21 de juny, d'inversió estrangera al Principat d'Andorra – Law 10/2012), foreign investment entails the acquisition of assets located in Andorra by the following:

  • a non-resident individual (without Andorran nationality);
  • foreign legal persons; and
  • local legal persons with a foreign equity interest, directly or indirectly, of more than 50% of the share capital or the voting rights.

Foreign investment can be realised through contributions in cash or in kind, and via the following mechanisms:

  • direct investments (ie, ownership in equity interests in Andorran companies or branch incorporations);
  • portfolio investments (ie, securities underwriting or equity shareholdings in collective investment funds);
  • real estate investments; and
  • other investments.

Overall, foreign investments are subject to prior authorisation (autorització d’inversió estrangera) before the Andorran Government, namely the Ministry of the Presidency, Economy and Business (Ministeri de Presidència, Economia i Empresa). Details of the different scenarios are as follows:

  • Direct investments: prior authorisation is required when, upon the acquisition, the acquirer holds, directly or indirectly, an undertaking that represents more than 10% of the share capital or of the voting rights of the Andorran company. The following legal transactions also trigger authorisation requirements:
    1. a substantial change of the company’s corporate purpose;
    2. a capital increase (without a charge to voluntary reserves); and
    3. when an increase of the foreign undertaking is equal to or higher than 50%.
  • Portfolio investments: initially, portfolio investments do not require prior authorisation. However, equity shareholdings in collective investment funds trigger authorisation requirements if the relevant percentage is 50% or more, and at least 50% of the fund’s total asset value is composed of shareholdings or equity interests in Andorran companies and/or real estate located in Andorra (including rights in rem other than security rights).
  • Real estate investments: prior authorisation is always required.

Foreign investments duly authorised by the Andorran Government must be carried out within the period indicated therein or, failing that, within six months.

Direct investments carried out by foreign financial entities in Andorran non-financial companies cannot exceed 25% of the share capital. Such transactions are also subject to a prior favourable report issued by the Andorran Financial Authority (Autoritat Financera Andorrana – AFA).

The procedure for obtaining the foreign investment authorisation begins with the submission of an application to the Foreign Investment Registry, which is hierarchically dependent on the Ministry of the Presidency, Economy and Business (Ministeri de Presidència, Economia i Empresa) of the Andorran Government.

The application is usually followed by the following documentation/information:

  • for natural persons, a photocopy of the passport is usually requested, as well as a certificate of criminal records from the home country and the country of last residence; and
  • for legal persons, a photocopy of the passport is required, alongside a power of attorney and certificate of criminal records of those acting as proxies or representatives, a photocopy of the deed of incorporation and a certification from the general meeting where the foreign investment is agreed.

This documentation must be duly legalised and apostilled in order to be recognised in Andorra.

Notwithstanding the foregoing, and to the extent that Andorran laws do not provide for a numerus clausus documentation checklist, it is common practice to hold a first-approach meeting with the Foreign Investment Registry to determine what documentation is to be submitted.

Overall, the granting of authorisation takes one month from the date of the submission of the application, which can be extended up to a maximum of 15 days.

Law 10/2012 does not expressly specify sanctions for any administrative infringement or non-compliance with the above requirements. This piece of law only provides for the nullity of any act and business contrary to such law, as well as fraudulent activities, whilst preserving the effectiveness on bona fide third parties.

Pursuant to Law 10/2012, foreign investments duly granted by the correspondent registry must be concluded before an Andorran Public Notary.

Law 10/2012 also establishes a safeguard clause, whereby foreign investments carried out by individuals or legal persons resident/located in non-cooperative countries for the purposes of money laundering and the financing of terrorism, as defined by the Financial Action Task Force (FATF) or other competent international bodies, shall not be authorised, nor will those investments that could result in a detriment to the exercise of public power, national sovereignty and security, public and economic order, the environment, public health or the general interest of Andorra.

The investor can challenge the authority's decision not to grant the foreign investment authorisation. Accordingly, the investor can lodge an administrative recourse within one month of the notification of the resolution.

Where the investment authority dismisses the appeal, or if two months have elapsed without a decision being issued by the foreign investment authorisation within the administrative phase, the investor may file a claim before the contentious administrative courts.

The prevailing forms of legal entities within the Andorran ecosystem are limited liability companies (LLC) and public limited companies (PLC). Both have a separate legal personality and operate under the principle of partner liability limitation up to the amount of the contribution to the share capital, which shall be a minimum of EUR3,000 for LLC and EUR60,000 for PLC.

No minimum number of shareholders is established, so both LLCs and PLCs allow for sole membership.

On a practical level, LLCs are the most commonly used legal forms in the Andorran marketplace. Conversely, PLCs are expressly required in regulated sectors (ie, the financial and insurance industries).

The incorporation of an Andorran company often entails prior investment authorisation, as set out previously.

If applicable, and upon the foreign investment authorisation being granted, the first step is the application before the Companies Registry (Registre de Societats) for the corporate name reservation. It is also necessary to pre-open a bank account under the company name, with the minimum capital share being the deposited amount.

Subsequently, the company is incorporated by granting a public deed before an Andorran Public Notary, where, accompanied by the aforementioned documentation, shareholders, the company bylaws and the administrative body shall be identified and pinpointed.

Pursuant to Law 20/2007, of 18 October, on public limited companies and limited liability companies (Llei 20/2007, del 18 d’octubre, de societats anònimes i de responsabilitat limitada – Law 20/2007), the deed of incorporation has constitutive effects. To this extent, the company shall be incorporated even if no further registration in the Companies Registry occurs. In this scenario, the company shall be able to operate within Andorra, although both the shareholders and directors shall be jointly and unlimitedly liable for the debts of the “irregular” company.

The Public Notary is obliged to register the company in the Companies Registry within 15 days of the deed of incorporation being signed.

The act of conducting a commercial activity in Andorra – namely the offering of goods or services within Andorra – also triggers an additional administrative requirement. Specifically, a trade opening (obertura comercial) must be applied for from the town hall (Comuns) of each administrative unit or parish (Parròquia) where the company shall conduct its business activity.

Accordingly, the timing of an incorporation shall depend on whether the foreign investment authorisation is required beforehand, and on the subsequent trade opening.

A priori, the whole process (including both foreign investment and trade opening authorisations) usually takes two months.

Under Law 20/2007, Andorran companies are subject to both reporting and disclosure obligations. Some of these obligations are required to be completed on a regular basis, such as the submission of the annual financial statements to the Companies Registry and both the corporate income tax and non-resident income tax returns to the tax authority, if required.

There are other reporting and disclosure obligations, albeit of an eventual nature, such as amendments to the bylaws, variations in the share capital (either by capital increase or reduction), changes in the shareholding structure of the company, and the disclosure of the ultimate beneficial owner and relevant changes.

Note that the minutes book is not required to be submitted to the Companies Registry; it must merely be kept up-to-date.

Finally, it should be noted that the shareholder composition is public in order to promote transparency. This implies that each transfer of shares entails its correspondent registration in the Companies Registry, with the exception of open-ended collective investment schemes (SICAV). The obligation to register the transaction lies with the Public Notary.

The basic framework on management structures, established by Law 20/2007, is based on a one-tier management structure. Accordingly, the administrative body carries out both management and supervision functions.

Pursuant to this piece of regulation, the administrative body can take the form of a single director, two joint directors, two separate directors, or a board of directors (which can consist of two directors).

Law 20/2007 also provides for the delegation of certain executive functions (with the exception of accountability and those functions conferred by the general meeting) to an executive committee, or to one or more managing directors. Additionally, the board of directors is entitled to set up other committees required for conducting day-to-day activities.

Specific regulations covering financial and insurance activities, such as Law 8/2013 of 9 May 1993 on the organisational requirements and operating conditions of bodies operating within the financial system, investor protection, market abuse and financial guarantee agreements (Llei 8/2013, del 9 de maig, sobre els requisits organitzatius i les condicions de funcionament de les entitats operatives del sistema financer, la protecció de l’inversor, l’abús de mercat i els acords de garantia financera), have been amended to make them more stringent, and Law 12/2017 of 22 June on the regulation and supervision of insurance and reinsurance in the Principality of Andorra (Llei 12/2017, del 22 de juny, d’ordenació i supervisió d’assegurances i reassegurances del Principat d’Andorra) provides for specific fit and proper requirements applicable to the members of the board of directors, senior managers and key functions (ie, risk, compliance and audit functions), as well as the organisational structure through delegated committees, according to the proportionality principle.

Pursuant to Law 20/2007, directors are obliged to compensate for any damage caused to the company by any act or omission breaching the law or bylaws. In the case of a breach of the duty of loyalty, directors are also obliged to reimburse the profits gained.

The time limit for directors’ liability is four years from the date of dismissal.

In parallel, Andorran laws recognise a corporate liability action (acció social de responsabilitat), which results in legal proceedings being brought against the director. The corporate liability action requires a prior resolution adopted by the general meeting (ie, 51%, representing at least 33% of the share capital), even if it is not included in the agenda.

Finally, it should be noted that the criminal liability of legal entities does not apply in Andorra.

Employment relationships are regulated through Law 31/2018, on labour relations (Llei 31/2018, de relacions laborals – Law 31/2018). The relevant case law is also pertinent to the interpretation of the labour regulations.

Pursuant to Law 31/2018, employment contracts have to be concluded in writing. The classification of employment contracts shall depend on the duration, the specific contract modalities, and the working time. Each contract has its own features and particularities.

The maximum legal ordinary working time established by law is 40 hours per week. Overtime hours are defined in the law as those hours that exceed the maximum legal ordinary working day established by the contract. If the employee is under the minimum age or is pregnant, overtime hours are forbidden. Each overtime hour must be paid with a minimum of 40% of the fixed amount salary.

Law 31/2018 establishes that employment contracts can be terminated according to the following reasons:

  • expiry of the deadline;
  • mutual agreement;
  • the death or incapacity of the employee;
  • the death or incapacity of the employer if it results in the closure of the company;
  • the retirement of the employer if some requirements are fulfilled;
  • if the employee has been deprived of liberty by a court judgment;
  • the employer's declaration of bankruptcy;
  • fortuitous events or force majeure, which may result in the closure of the company; and
  • job layoff.

In this latter scenario, Andorran law provides for severance pay according to the modality of the relevant contract.

The employee is entitled to exercise his/her own rights through a collective representation if the company has fewer than ten employees. If the company has between 11 and 30 employees, it is compulsory to appoint a representative. In the event of more than 30 employees, Law 31/2018 establishes the compulsory number of representatives according to the number of employees. The role of the employee representative includes participating in the negotiation of collective agreements, ensuring the enforcement of the labour law, and promoting collective actions, if necessary, including general strike.

An employee's salary is considered employment income, and shall be taxed in his/her own Personal Income Tax at the following tax rates:

  • EUR0 to EUR24,000: 0%;
  • EUR24,000 to EUR40,000: 5%; and
  • more than EUR40,000: 10%.

Social security contributions are 6.5% for employees and 15.5% for employers.

A company resident in Andorra is subject to corporation tax on its worldwide income, profits and capital gains.

The tax rate for Corporate Income Tax is 10%.

Intercompany dividends are exempt if the following requirements are met:

  • the subsidiary is subject without exemption to tax or, in the event of a non-resident subsidiary, to a tax similar to the Andorran corporate income tax (ie, at least 40% of the Andorran corporate income tax rate);
  • the shareholding in the subsidiary is at least 5% of the share capital; and 
  • the shareholding is maintained for at least one year before the capital gain arose.

Foreign withholding taxes are deductible through the Double Taxation Deduction. The general rate for the IGI (Impost General Indirecte – VAT) is 4.5%. However, certain types of activities are subject to special tax rates (ie, 9.5%  for banking and financial services, or 0% for real estate renting).

Under the Andorran tax laws, the main tax incentives are as follows:

  • a deduction for the creation of employment: EUR3,000 per full-time person (40h/week);
  • a deduction for new investments in Andorra: the deduction consists of the application of 5% on the new investments; and
  • participation in the exemption regime applicable to capital gains and dividends under certain requirements (note that a participation equal to or higher than 5%, including the subsidiary, must be subject to a similar corporate income tax at a minimum tax rate of 4%).

Tax consolidation is a special regime applicable under certain requirements. The parent company must hold a minimum of 75% of the shares of its Andorran subsidiaries in order for the consolidation regime to reply. However, the company must make a prior request for the application of such regime from the local tax authorities.

No thin capitalisation rules apply in Andorra.

The related transactions shall be in accordance with the transfer pricing rules established by the OECD standards. There is no mandatory documentation for related transactions regulated in Andorra.

No specific anti-evasion rules are regulated in Andorra, although there are general anti-evasion rules regarding fraud or tax simulation.

The Andorran tax legislator is gradually incorporating the Base Erosion Profit Shifting (BEPS) provisions and the anti-evasion rules.

The Andorran competition rules are governed by Law 13/2013, of 13 June, on effective competition and consumer protection (Llei 13/2013, de 13 de juny, de la competència efectiva i la protecció del consumidor – Law 13/2013). This piece of legislation establishes the obligation to notify the Ministry of Presidency, Economy and Business (Ministeri de Presidència, Economia i Empresa) of any economic concentrations where all the companies involved in the concentration have, according to publicly available information, a market share of 50% or more in any relevant market in Andorra, and at least two of the companies involved have an individual annual turnover of more than EUR2.5 million in Andorra.

To this extent, transactions within a two-year term shall be considered a sole transaction. Likewise, an “economic concentration” is produced by a stable change of control of all or part of one or more companies as a result of a merger, acquisition or joint venture and the acquisition of joint control over one or more companies, where they perform the functions of an autonomous economic entity on a regular basis.

The procedure for the notification and monitoring of economic concentrations consists of notifying the existence of the economic concentration transaction to the Ministry of Presidency, Economy and Business prior to the execution thereof.

The notification must include a brief explanation of the activities of the participating companies in Andorra, as well as the impact of such transaction on the relevant product or service markets.

In any case, notification must be concluded prior to the merger. Although Law 13/2013 is silent on a specific procedure and deadlines for the control of concentrations, the Ministry of Presidency, Economy and Business is empowered to monitor, and to impose a sanction of up to 3% of the turnover obtained within the year preceding the year in which the sanction is imposed.

Law 13/2013 expressly prohibits all agreements, decisions and concerted practices between companies, including recommendations by business associations, the effects of which prevent, restrict or distort competition in all or part of a relevant market.

Such prohibited agreements, decisions and concerted practices may include, but are not limited to, the following:

  • fixing – directly or indirectly – the price or other commercial conditions of the purchase or sale of goods or services;
  • limiting or controlling production, imports, the market, technical development or investments;
  • distributing the markets or the sources of supply;
  • applying unequal conditions for equivalent services to third party contractors, which may result in a competitive disadvantage; and
  • subordinating the subscription of contracts to the acceptance of supplementary services that, by their nature or according to commercial usage, have no relation to the object of the relevant contracts.

Likewise, Law 13/2013 states that legal transactions resulting from prohibited conduct shall be null and void.

Law 13/2013 also prohibits any conduct that constitutes an abuse of a dominant position on the market and whose effects harm consumers or contribute to unjustified exclusions from the market.

Such practices may consist of the following:

  • unfair purchases or sales prices or other unfair trading conditions;
  • the limitation of manufacture, imports, markets or technical development to the prejudice of consumers;
  • the application of dissimilar conditions to equivalent transactions with third parties, resulting in a competitive disadvantage; and/or
  • the conclusion of contracts subject to the acceptance by other parties of supplementary performance unrelated to the subject of the relevant contract.

Law 13/2013 also establishes that legal transactions resulting from such prohibited conducts shall be null and void.

Intellectual property in Andorra is governed by Law 26/2014 of 30 October on patents (Llei 26/2014 del 30 d’octubre, de patents).

Patents are defined as legal instruments that give their owner an exclusive right to develop the invention, materially rewarding the creative effort and contributing to the profitability of the capital invested within the inventive process.

To this extent, patents must meet the specific requirements of novelty, inventive step and suitability for industrial application.

Intellectual property matters fall under the jurisdiction of the Office of Trade Marks and Patents of the Principality of Andorra (Oficina de Marques i Patents del Principat d'Andorra – OMPA).

The procedure for obtaining a patent consists of submitting an application to the OMPA, including a request for the grant of the patent, the identification of the applicant, a description of the invention, one or more claims, a sketch or drawing, and a brief summary of the invention.

The submission of the application is subject to filing fees.

To the extent that Andorra has opted for a mere deposit model, the OMPA does not examine the substantive requirements of the patent.

The patent right extends for a non-renewable period of 20 years from the date of submitting the application.

In the event of an infringement, the patent holder shall be entitled to bring civil (ie, up to five years after the date the patent holder learns of the infringement) and/or criminal actions before the judicial authority, asking for:

  • the cessation of the infringing acts;
  • compensation for damages;
  • seizure of the objects manufactured or imported in violation of the patent right;
  • the attribution of ownership of the objects or means intended for its manufacturing;
  • the adoption of all necessary measures to prevent further infringements (and in particular the destruction of the objects or means seized); and
  • the publication of the sanction.

Under the terms of Law on Trade Marks of 11 May 1995 (Llei de marques, de l’11 de maig de 1995), a trade mark is defined as any sign that serves to distinguish the goods or services of one company from those of another company, and which can be graphically reproduced.

In particular, the following may constitute a trade mark:

  • words, including personal names, letters, initials and numbers;
  • figurative signs such as drawings, logos, signs, the shape of the product or its condition;
  • combinations or colours; or
  • any combination of the above.

The registration of a trade mark is obtained by filing an application with the OMPA. Such application shall be supported by the identification of the depositor, the details of the representative (if any), the reproduction of the trade mark, and the name of the goods and services for which it is requested, according to the International Classification of Goods and Services established by the Nice Agreement of 15 June 1957.

The trade mark protection period is ten years, and can be extended for further periods of ten years. During the protection period, the trade mark holder may bring civil or criminal actions before the judicial authorities against any person who infringes his/her right. In addition to obtaining compensation for damages, precautionary measures or other ancillary measures may be requested in order to cease the breaching of trade mark rights, such as the seizure of the goods that infringe the trade mark rights and the detention of such goods at customs.

Andorran laws do not provide a specific regime for industrial designs. Accordingly, the Law on the Protection of Copyright and Related Rights of June 10, 1999 (Llei sobre drets d’autor i drets veïns, del 10 de juny de 1999) establishes a general regime with the aim of protecting the economic and moral rights of the author. Although there are some exceptions, such as private reproduction for personal purposes, the protection extends for a period of 70 years after the death of the author.

Unlike patents or trade mark rights, authorship is presumed iuris tantum. To this extent, it is not subject to registration, which leads to a legal uncertainty, where the burden of proof on the designer is particularly relevant.

Infringements of any economic or moral rights may result in the civil and/or criminal liability of the offender (ie, civil or criminal actions may be brought before the court by the author or the owner of the rights), in particular to order the offending party to cease infringing the rights of the owner of the copyright or a right of access, to obtain adequate compensation for damages, or to order the removal from commercial channels or the destruction without compensation of the infringing goods, as well as the materials and resources used predominantly for the creation of the infringing goods.

As stated previously, the copyright regime is ruled by the Law on the Protection of Copyright and Related Rights of June 10, 1999, which recognises the exclusive economic and moral rights of the author. Such recognition shall not require any entry in a public registry, whose authorship shall be presumed iuris tantum. The procedure for exercising and enforcing the right, as well as the complementary measures, is as described in 7.3 Industrial Design.

To the extent that the only registration system is for patents or trade marks, it is common practice to register other IP rights at the European level before the European Union Intellectual Property Office (EUIPO).

Although Andorra is not a member of the European Union, rules governing the legal regime of patents do provide for the recognition of rights acquired abroad when international agreements are in place (as in this case, the Monetary Agreement between the European Union and the Principality of Andorra) or according to the principle of reciprocity, which could be extended to other intellectual property rights.

Data protection regulation is governed by Law 15/2003, of December 18, qualified protection of personal data (Llei 15/2003, del 18 de desembre, qualificada de protecció de dades personals – Law 15/2013).

The Andorran Data Protection Agency Regulation of June 9, 2010 (Reglament, del 9 de juny del 2010, de l’Agència Andorrana de Protecció de Dades) develops the principles applicable to the processing of personal data and governs the organisation and functioning of the Andorran Data Protection Agency (Agència Andorrana de Protecció de Dades). The guidelines, recommendations, reports and opinions to be issued by the Agency under the aforementioned regulation are particularly relevant within the jurisdiction.

The General Data Protection Regulation (GDPR) may also apply, according to its extraterritorial effect.

The aforementioned data protection regulations apply to the creation of files and the processing of personal data by the party responsible for data processing when the company is domiciled or incorporated in accordance with the Andorran laws. Such regulations are applicable to data processing carried out by other parties responsible for data processing when using processing facilities located in Andorra.

The Andorran Data Protection Authority is an independent public authority that supervises the application of the Andorran data protection laws, through monitoring and corrective powers. It also provides expert advice on data protection issues and handles complaints lodged against violations of regulations.

Casas & Lacambra

Manuel Cerqueda i Escaler
3-5 - AD700

+376 728 001
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Law and Practice in Andorra


Cases & Lacambra is the leading business law firm in the Principality of Andorra, and has a marked international character. It seeks to offer the best comprehensive advice in business law for local and international players. Since its foundation, the firm has had a solid, recognised and highly tested track record in its jurisdiction, in both national and cross-border banking matters, including the regulation of financial markets, corporate and debt transactions, special situations and asset recovery. The firm has also had a market-leading tax practice since 2016. The firm's highly qualified professionals have very marked methodologies and are oriented to satisfy the needs of the most demanding international institutional and private clients.