Andorra's civil-law system is based primarily on the Constitution of 1993 as the supreme legal norm. Its private law has also been influenced by both Roman law and Catalan legal traditions. Case law is not formally binding, although decisions of the higher courts are highly persuasive.

The Batllia is the main first-instance court for civil, administrative and certain criminal matters, while the Tribunal de Corts primarily hears serious criminal cases. Appeals are generally decided by the High Court of Justice. The Constitutional Court, which is separate from the ordinary judiciary, reviews constitutional matters and protects fundamental rights. Once effective domestic remedies have been exhausted, individuals may also bring an application before the European Court of Human Rights concerning an alleged violation of the European Convention on human rights attributable to Andorra.

Foreign investment in Andorra is generally subject to prior administrative authorisation by the Andorran Government. Approval is required for incorporating or acquiring interests in Andorran companies, establishing branches or permanent establishments, and acquiring more than 10% of a company’s capital or voting rights; subsequent changes above that threshold also require approval. Direct and indirect holdings are aggregated. Real estate investments always require prior approval, subject to limited inheritance and matrimonial-property exceptions. Applications are assessed against public order, national security, economic stability, environmental, housing, labour-market, public-health and anti-money laundering considerations. Real estate acquisitions are quantitatively restricted, while property development and tourist accommodation investments are subject to specific prohibitions or conditions. Regulated sectors, including finance, insurance and telecommunications, may require additional sector-specific approvals.

Foreign investors must submit a prior-authorisation application to the competent ministry, either directly or through an authorised representative. The filing must identify the investor, beneficial ownership and proposed investment, and include supporting corporate and transaction documents. Individuals must generally provide a valid passport and criminal-record certificate, duly legalised or apostilled as applicable. Additional documents may be required depending on whether the investment concerns a company, shareholding or real estate. The statutory decision period is two months, extendable by one further month, and the investment may only be completed after approval. Unauthorised investments may be declared null and void.

Foreign investment approvals may be made subject to compliance with the conditions stated in the application and authorisation. In practice, investors may be expected to demonstrate effective economic activity, adequate financing, genuine business substance, employment creation, sustainability and consistency with Andorra’s public and economic interests. Companies with foreign investment must generally commence effective activity within 18 months and comply with ongoing reporting and operational requirements. For certain real estate investments, commitments may include maintaining the asset, using it for an authorised business purpose or creating and preserving employment. The government has recently intensified its scrutiny and may reject projects that fail to meet statutory requirements or do not generate sufficient added value for Andorra.

A refusal of foreign investment authorisation is a reasoned administrative act and may be challenged for errors of law, fact, procedure or misuse of administrative discretion. The investor must generally file an administrative appeal before the government. Once the administrative route has been exhausted, judicial review may be sought before the Administrative Section of the Batllia.

The principal corporate vehicles are the societat de responsabilitat limitada (SL) and the societat anònima (SA). Both may be incorporated by one or more shareholders, whose liability is generally limited to their capital contributions. An SL requires minimum share capital of EUR3,000, while an SA requires EUR60,000, fully subscribed and paid in. Both are governed by the shareholders' general meeting and may be managed by a sole director, joint or several directors, or a board of directors.

The SL is the most commonly used form because of its lower capital requirement and flexible governance, making it suitable for greenfield projects, family businesses, holdings and joint ventures.

The SA is generally preferred for larger projects, broader investment structures and businesses requiring more sophisticated governance. Certain regulated activities, particularly in the financial sector, must be carried out through an SA or another specifically prescribed legal form.

The process to set up a company generally begins with the reservation of the company name and, where applicable, obtaining prior foreign investment authorisation. The founders must then open an Andorran bank account and deposit the required share capital. Once the bank certificate and corporate documents are available, the articles of association are executed before an Andorran notary. The company is subsequently registered with the Companies Registry and obtains its tax and administrative identification details. Before commencing operations, it must complete the commercial opening procedure and secure any municipal or sector-specific authorisations required for its activity. In practice, the process usually takes approximately three to four months and remains relatively documentation-intensive. Administrative procedures are, however, being digitised in Andorra, with the objective of enabling more stages to be completed online.

Private companies are subject to ongoing filing and disclosure obligations. Changes to the management body, including appointments and removals, and amendments to the articles must generally be approved by the shareholders’ general meeting, formalised before an Andorran notary and registered with the Companies Registry.

Companies must also file their annual accounts and periodically confirm or update their beneficial ownership information, which are publicly recorded in the Companies Registry and generally include key corporate data, as well as the identity of registered shareholders and directors. Failure to comply may result in sanctions and restrictions on further registry filings.

Andorran companies may be managed by a sole director, two or more joint directors, two or more several directors, or a board of directors. A sole director exercises the management and representation powers individually. Joint directors must act together in accordance with the articles, while several directors may generally bind the company independently. A board of directors is a collegiate body that adopts decisions collectively, subject to quorum and majority requirements, and may delegate specific powers where legally permitted. Andorran law therefore follows a flexible one-tier model rather than a mandatory two-tier structure.

Directors may incur civil, administrative and, where their conduct constitutes an offence, criminal liability. They must act in the company’s interests with the diligence of an orderly businessperson and the loyalty of a faithful representative, remain properly informed, participate actively in management and investigate irregularities.

Directors are liable for damage caused by acts or omissions contrary to law, the articles or their statutory duties, and liability may extend jointly to all participating directors, including de facto directors.

Andorran courts also recognise an exceptional doctrine comparable to “piercing the corporate veil”, allowing the company’s separate legal personality to be disregarded where it is used fraudulently, abusively or to evade legal obligations, potentially exposing shareholders or controlling persons to personal liability.

Employment relationships in Andorra are primarily governed by the Law on Labour Relations, alongside mandatory statutory minimum standards, individual employment contracts and, where applicable, collective bargaining agreements. Employment contracts may be indefinite or fixed-term and should clearly regulate the position, duties, remuneration, working time, probation, duration and termination conditions.

The parties retain contractual freedom, but they may not waive mandatory employee protections concerning matters such as salary, working hours, leave, equality and health and safety. Case law assists in interpreting these rules, while employment disputes fall within the civil jurisdiction.

The recruitment of non-resident foreign nationals is also subject to immigration quotas and work-authorisation requirements. In practice, available positions must generally be offered first to Andorran nationals and lawful residents before an employer may recruit from abroad.

Employment contracts must be concluded individually and in writing, irrespective of their duration or type; a purely verbal contract does not satisfy the statutory formalities. The contract should identify the parties and regulate the employee’s position, duties, remuneration, working time, workplace, start date and any probationary period. Contracts may be indefinite or concluded under one of the legally recognised fixed-term or special arrangements.

Fixed-term contracts must state the objective reason for their temporary nature and the date or circumstances determining their expiry. Any contractual term that provides less favourable conditions than mandatory employment law or an applicable collective agreement is invalid.

The statutory standard working week is 40 hours, although part-time and legally permitted flexible arrangements may apply. Under an irregular working-time system, daily work may not generally exceed ten hours or 48 hours per week, and minimum rest periods must be observed.

Overtime comprises hours exceeding the statutory, contractual or collectively agreed working time and is limited to 12 hours per week, 48 hours per month and 426 hours per year. It is generally voluntary for the employee, except in exceptional or force majeure circumstances. Overtime must be paid with at least a premium or, with the employee’s consent, compensated by equivalent paid rest.

Andorra is not an employment-at-will jurisdiction. Indefinite contracts may be terminated without cause subject to statutory notice and compensation, while fixed-term contracts normally end on the agreed date or upon completion of the relevant work. Employers may also dismiss employees for objective or disciplinary reasons, provided the legal grounds and procedural requirements under Law 31/2018 are met. Unjustified, defective or discriminatory dismissals may trigger increased compensation or nullity.

Collective redundancies arise when dismissals exceed the statutory workforce thresholds within 90 days. Employers must consult employee representatives, justify the measures and notify the Labour Ministry. An agreement is not mandatory; however, in its absence, prior administrative authorisation is required. Affected employees are entitled to the notice and compensation applicable to objective dismissal.

Employers must inform employees of their role, duties and working conditions, which should be clearly stated in the written employment contract. They must also comply with ongoing obligations concerning remuneration, working time, health and safety, equality and any material changes affecting the employment relationship.

Employee representation is not mandatory in every company. However, companies with more than 30 employees must establish a works council elected by the workforce. Management must inform and consult that body on relevant employment, organisational and collective measures.

Employment income is taxed at a maximum rate of 10%, subject to statutory allowances and reductions. Employers must withhold and remit any applicable personal income tax.

Social security contributions to the Caixa Andorrana de Seguretat Social (CASS) amount to 22% of gross salary: 6.5% is borne by the employee and withheld from salary, while 15.5% is paid by the employer. These contributions cover the general healthcare and retirement benefits. No separate payroll tax generally applies.

Companies incorporated in Andorra are generally subject to corporate income tax on worldwide profits at a standard rate of 10%, subject to available exemptions, deductions and special regimes.

Businesses supplying goods or services are also subject to the general indirect tax (IGI), normally at 4.5%, with reduced and increased rates for certain transactions.

Dividends distributed by Andorran companies are generally not subject to withholding tax, while payments to non-residents, including certain interest and service income, may attract non-resident income tax at up to 10%, subject to domestic exemptions and tax treaties.

Real estate transfers may trigger transfer tax, generally between 3% and 4%, and foreign real estate investment may also be subject to a specific tax (currently 6%).

As of June 2026, Andorra has not implemented the OECD Pillar Two GloBE rules or a domestic top-up tax, and no Andorran regime appears on the OECD Central Record as qualifying for safe-harbour status.

Andorra already offers a competitive tax framework, with maximum rates of 10% for corporate and personal income tax and a general IGI rate of 4.5%.

Corporate incentives include deductions for creating permanent employment and for qualifying new investments made in Andorra.

Eligible holding companies may benefit from an exemption on qualifying foreign dividends and capital gains, rather than a general 80% rebate. An 80% reduction applies to certain international intangible, trading and intragroup financial activities, subject to strict substance, activity and authorisation requirements.

Tax-neutral treatment may also be available for qualifying corporate reorganisations.

Tax consolidation is available on an optional basis for qualifying Andorran corporate groups. All eligible group companies must agree to apply the regime, consolidate their financial statements and satisfy the statutory parent–subsidiary ownership requirements. The parent company must notify the Ministry of Finance before the beginning of the first tax period concerned and assumes responsibility for the group’s consolidated corporate tax filing.

Andorra does not apply a traditional debt-to-equity thin-capitalisation ratio. However, net financial expenses are generally deductible only up to certain percentage of tax-adjusted EBITDA, subject to a minimum deduction and statutory exemptions. Related-party financing must also comply with arm’s-length transfer-pricing rules.

Transfer pricing rules apply to transactions between related parties, which must be valued on an arm’s-length basis. The Andorran tax authorities may adjust the taxable base where agreed terms differ from market conditions, and taxpayers must retain sufficient supporting documentation.

Andorra applies anti-evasion rules allowing the tax authorities to disregard simulated, abusive or artificial arrangements lacking economic substance. These measures are supported by transfer-pricing, beneficial-ownership, anti-money laundering and tax-information exchange rules. Breaches may lead to reassessment, interest, penalties and, in serious cases, criminal liability.

Banking and financial services are subject to an increased IGI rate of 9.5%. Foreign real estate investment is also taxed at 6% for qualifying limited acquisitions and 10% for other investments exceeding the statutory limits. Current developments are influenced by Andorra’s closer economic integration with the EU.

Andorra does not currently apply a general merger-control notification regime based on turnover or market-share thresholds. However, acquisitions, mergers or joint ventures involving foreign investors require prior Government authorisation where they constitute foreign investment, including the acquisition of more than 10% of an Andorran company. Corporate mergers and demergers must also be registered with the Companies Registry. Where the tax-neutral restructuring regime is applied, the transaction must be notified to the tax authorities before execution of the relevant public deed.

The process usually begins with due diligence, negotiation and preparation of a common merger plan and merger balance sheets. The governing bodies approve the plan, which is then submitted to the shareholders of each participating company for approval. Any required independent expert reports and creditor protection procedures must be completed before implementation.

Where the tax-neutral restructuring regime applies, the transaction must be notified to the tax authorities before execution of the public deed and must be supported by valid economic reasons. The merger is then formalised before an Andorran notary and registered with the Companies Registry, producing universal succession of assets and liabilities. Foreign investment authorisation may also be required. Depending on complexity and approvals, the process generally takes three to four months.

Law 13/2013 on effective competition and consumer protection prohibits agreements, concerted practices and decisions that restrict competition, including price-fixing, market-sharing and output limitations. It also prohibits abuse of a dominant position (see 6.4 Abuse of Dominant Position), subject to limited statutory exemptions and de minimis rules.

The regime applies to conduct carried out in Andorra and to conduct implemented abroad where it produces or may produce anti-competitive effects in the Andorran market. Infringements may result in administrative sanctions, invalidity of the relevant arrangements and civil liability.

Law 13/2013 prohibits the abuse of an individual or collective dominant position where conduct harms consumers or unjustifiably forecloses the market. Prohibited practices include unfair pricing, limiting production or market access, discriminatory conditions and contractual tying.

Andorran law does not establish a separate general prohibition of abuse of economic dependency, although such conduct may fall within dominance, unfair competition or general contractual rules.

The regime applies whenever the conduct produces effects in Andorra, irrespective of where it occurred or the parties’ domicile.

According to Andorran legislation, a patent protects an invention in any technological field that is new, involves an inventive step and is capable of industrial application. Protection lasts 20 years from the filing date, subject to payment of annual renewal fees. Applications are filed with the Andorran Trademarks and Patents Office and must include a description, claims, drawings where applicable and an abstract. Following formal examination, the application is normally published after several months and, once the applicable requirements and fees are satisfied, the patent is granted and registered. Patent holders may bring civil proceedings seeking cessation of infringement, injunctions, damages, seizure or destruction of infringing goods and publication of the judgment; invalid patents may be challenged before the courts.

According to Andorran law, a trade mark is any sign capable of distinguishing the goods or services of one undertaking from others.

Registration with the Andorran Trademarks and Patents Office (OMPA) grants protection for ten years, renewable indefinitely for successive ten-year periods. The application must identify the mark, owner and relevant Nice classes, after which OMPA conducts a formal examination and registers the mark if statutory requirements are met.

Infringement may be challenged through civil proceedings seeking injunctions, damages, seizure or destruction of infringing goods and publication of the judgment.

As Andorran registration protects only within Andorra, internationally active businesses should also consider obtaining an EU trade mark or other foreign protection.

Andorra currently has no specific national registration system granting standalone industrial design rights. A product’s appearance may nevertheless be protected automatically by copyright where it qualifies as an original artistic work. Additional protection may arise through three-dimensional trademarks, patents for technical features and unfair competition rules. Rights holders may seek injunctions, damages, withdrawal or destruction of infringing products and, where applicable, criminal remedies.

Copyright protects original literary, artistic and scientific works, including software and audiovisual creations, from the moment of creation. No registration is required, although evidence of authorship and creation date is advisable.

Economic rights generally last for the author’s lifetime plus 70 years. Infringement may give rise to injunctions, damages, withdrawal or destruction of unlawful copies and, in serious cases, criminal liability.

Trade secrets are safeguarded through confidentiality, contractual and unfair competition rules, provided reasonable measures are taken to preserve secrecy. It is recommended to document and notarise the relevant IP, register protectable rights whenever possible, and maintain clear evidence of creation and ownership. Agreements with developers, employees and contractors should expressly regulate confidentiality, IP assignment, permitted use and ownership of improvements.

Data protection is primarily governed by Qualified Law 29/2021 on Personal Data Protection, as amended by Qualified Law 12/2024, and its implementing regulations. The framework is closely aligned with the EU GDPR and regulates lawful processing, transparency, data-subject rights, security, international transfers, breach notification and accountability. Compliance is supervised by the Andorran Data Protection Agency (APDA).

The GDPR may also apply directly to Andorran companies offering goods or services to, or monitoring, individuals in the European Economic Area. In practice, many Andorran businesses align their policies and procedures with GDPR standards to ensure consistent cross-border compliance.

Andorran data protection law applies to processing carried out by entities established in Andorra and may also apply to foreign companies targeting or monitoring individuals in Andorra.

Conversely, Andorran companies offering goods or services to, or monitoring, individuals in the European Economic Area (EEA) may be directly subject to the GDPR.

International transfers are restricted where the destination does not provide an equivalent level of protection, unless appropriate safeguards or a statutory exception applies. As Andorra benefits from an EU adequacy decision, data may generally flow freely between Andorra and the EEA.

The Andorran Data Protection Agency (APDA) is the independent supervisory authority responsible for monitoring and enforcing compliance with Andorran data protection law. It may issue guidance, advise public bodies and organisations, investigate complaints, conduct inspections and order controllers or processors to remedy infringements.

The APDA may also impose corrective measures and effective, proportionate and dissuasive administrative sanctions. Its supervisory powers do not extend to processing carried out by courts when acting in their judicial capacity.

Andorra’s principal forthcoming legal development is the proposed Association Agreement with the European Union, which remains subject to completion of the European approval process and approval by referendum in Andorra.

If approved, the Agreement will require the progressive incorporation of substantial parts of the EU internal-market acquis into Andorran law, subject to the adaptations and transitional periods negotiated for the country.

This represents one of the most significant legal and institutional challenges in Andorra’s recent history and will affect numerous areas, including financial services, company law, employment, consumer protection and competition.

No definitive referendum or entry-into-force date has yet been confirmed. Nevertheless, many recent Andorran laws are already being drafted in alignment with European standards.