Open a Business in Andorra
Open a Business in AndorraUpdated on Thursday 14th May 2015
Tourism, retail sales and finance are the main economical activities in Andorra, sectors which represent more than three -quarters of GDP. Andorra is attractive to tourists from Spain and France due to the free zone. Andorra has developed an important tourist resort which is very active in the winter, gathering 11.6 million tourists every year.
Although less than 2% of the land is arable, agriculture and livestock were the main supports of the Andorran economy until the rise of tourism.
The banking sector, with its partial status of tax haven also contributes substantially to the Andorran economy. It is estimated that Andorran banks represent 16% of the country’s GDP.
In Andorra any company, except foundations, is taxed as follows:
- Companies operating in Andorra are charged with a corporate tax of 10%. Several deductions can reduce the amount of the corporate tax.
- Residents who provide services in Andorra for Andorran companies or individuals are also taxed with10 % from the business’ activity. There is no tax charged for the first 40,000 calculated as profit.
- Companies that operate internationally with intangible assets, engaged in international trade and financial investment and management companies can apply for 80 % deduction on their tax base, thus reducing the tax to 2 % .These companies must apply in advance for this deduction by following a certain procedure before the Andorran Government.
- Holding company with shares in international companies are exempt from tax on dividends and capital gains. The Holding Companies must also apply in advance for this exemption.
Import taxes have been replaced by IGI (Impost General Indirect) since 2013, tax that corresponds to the regular VAT, with the value of 4.5%,
In Andorra the employment contracts can be verbal or written and engages the employee to provide a service, intellectual or manual, or to perform work for another person or company that has to pay a salary.
The oral contract is concluded, unless written proof is served contrary, for indefinitely period.
The indefinite work contract is concluded for an indefinite period of time, thus it has no deadline delivery. The indefinite work contract does not affect the interests of the employee, but it is rather a measure of protection for him, designed to provide stability in employment law. This type of contract does not affect the employer’s interests either, thus ensuring better planning and a coherent work organizing, modeling and improving the staff’s skills.
When you hire an employee for a limited period or for a specific task, the contract shall be concluded in written. The contract will expire when the deadline is mentioned, but the contract may be renewed or even turned into an indefinite work contract. If it is not fixed in the contract a certain date for the completion of the employment relationship, the employee must notify the end of the contract with minimum15 calendar days in advance.
The trial period must be agreed in writing for both types of work contract and can not exceed one month (except for jobs in management which imply great responsibility).
The ordinary working day has 8 hours, thus 40 hours per week, spread over five days. Working hours exceeding 40 hours are considered overtime hours.
Employee and employer may agree on overtime up to 15 hours a week, 60 hours a month and 350 hours a year.
Overtime is paid with the increases payment system, or the parties may agree upon free time instead of payment, under the provisions of law.
The increases system provides: from the 1st to the 4th week of overtime the hours will be paid with a plus of 25% from the base salary, from the 5th to the 8th week overtime the hours will be paid with a plus of 50% from the base salary and from 9th week the extra hours are paid with a plus of 75% from the base salary.
However, the Andorran laws provide that any employee has the right to at least one full day of rest per week. They are also entitled to a paid annual leave for a minimum of 30 days per year.