Self-employment in Andorra

Being self-employed or working freelance in Andorra is regulated under the category self-employed (compte propi). The number of people in this category has increased in recent years, according to statistics prepared by the Government of Andorra, and more and more people are coming from abroad to work freelance in the Principality.

In this article, we explain the most important aspects of how to obtain a self-employed residence permit in Andorra.

Can I obtain a self-employed residence permit in Andorra?

There are two options for obtaining a self-employed residence permit in Andorra:

• Set up a company in which you are the director

In this case, you must set up an Andorran company and appoint yourself director.

This makes you an owner-employee of the company and allows you to obtain a self-employed residence permit.

Note that, among other requirements, you must also obtain a foreign investment authorisation and provide a non-interest-bearing deposit of €15,000 to the Andorran Financial Authority (AFA).

Lastly, keep in mind that you must find a registered office for your business, which can be either rented or purchased. For this purpose, Andorra offers several coworking spaces that allow you to register your office or business without incurring high structural costs.

• Obtain an authorisation to practise a profession

The second option depends on having a professional qualification. In this case, you must possess an official academic certificate from an Andorran higher education body or an equivalent qualification that is recognised in Andorra. Note that you can only practise what is specified in the certificate.

This method allows you to obtain the self-employed residence permit without the need for the foreign investment authorisation or €15,000 deposit to the AFA.

This is a less expensive option but is limited to specialist sectors such as law, engineering or architecture.

How much do you pay in social contributions?

The so-called “self-employed quota” are the contributions that the self-employed must pay to the Andorran Social Security System (known as the CASS). It is calculated on the basis of the Average Monthly Wage, currently established at €2,158.40.

Different bands of contributions are defined according to:

• The net income obtained from business activities, and
• The turnover associated with the economic activities relating to professional and business services or commercial activities.

So, the quota is calculated from the contribution base, described in the table below:

Among other circumstances, note that in the first year of activity, the contribution base can be 50% of the Global Average Monthly Wage, paying €254.73 for the first 12 months.

The advantages of being self-employed in Andorra

One of the main reasons why freelancers come to work in Andorra are the tax advantages offered by the Principality. Corporate Tax (IS), for example, is a maximum of 10%. The rate is the same for Personal Income Tax (IRPF) and Non-Resident Income Tax (IRNR). We would also highlight the exemptions on some types of income, such as income from dividends or capital gains from share transfers, when the holding is less than 25% of the capital or equity, or the shares have been owned for over 10 years, or are transferred between third-degree relatives.