Andorra, strategically located between Spain and France, has historically based its great economic prosperity on a model based on the competitiveness of tourism and commerce, on construction and on its status as an offshore financial market. The emergence of strong competition at the tourist level, the relativization of the price differential, the global crisis and the financial and construction sectors, and international pressure to eliminate offshore areas, have led to a significant decline in the classical model and the need to create a new economic model.
Andorra has opted for homologation with Europe, but yes, modulating certain differential characteristics that not only make us more competitive in our service offer, especially in trade and tourism, but also make us one of the most attractive European jurisdictions for the development of investment projects and business initiatives at an international level.
Before going into details about the advantages that the principality has to create companies in Andorra or establish a tax residence, we must highlight an important point, its extraordinary beauty. It is one of the best kept secrets in Europe in many respects. It is difficult to find a similar place that combines alpine landscapes with Mediterranean touches. The same can be said of its population, which combines multiple cultures: Spanish, French, Portuguese and of course the local Andorran culture, which is very similar to the neighboring Catalan culture. The multiculturalism in this country can be appreciated through its Mediterranean lifestyle, excellent cuisine and appreciation for socialization, family.
A fundamental requirement established by Andorran law for the creation of companies is that they have the material and human resources to carry out the activity of said company in a real and effective way. Currently, the simulation of activity and the creation of shell or shell companies, without any type of structure or substance, are totally contrary to the law and vetoed by the different entities of the country.
Consequently, a structure created in Andorra without any type of substance will very possibly be rejected by the jurisdiction of the country of tax residence of the partners of said company, since many countries even in their jurisdictions have anti-abuse measures to avoid tax evasion. .
But, what should I do so that Andorran society has substance?
There are different scenarios and levels relating to the substance of an Andorran company that are based on:
- Physical Location + Resident Partner / Manager - This would be the ideal scenario.
- Physical location + employment contract: in case none of the partners / administrators is a resident.
However, it is important to know that Andorran society will require a physical location for its constitution at all times.
Thus, the choice regarding the substance will depend in any case on the customer. However, it is always advisable to give the Andorran company maximum substance.