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Andorra, formally the Principality of Andorra, is a sovereign landlocked microstate in the eastern Pyrenees on the Iberian Peninsula, bordered to the north by France and to the south by Spain. Andorra, which is said to have been founded by Charlemagne, was administered by the count of Urgell until 988, when it was handed to the Roman Catholic Diocese of Urgell. A charter established the current principality in 1278. It is led by two co-princes: the Bishop of Urgell in Catalonia, Spain, and France's President. Andorra la Vella is its capital and biggest city.
Andorra is Europe's sixth-smallest state, with a land area of 468 square kilometers (181 square miles) and a population of roughly 77,006. The Andorrans are a Romance ethnic group descended from Catalans. Andorra is the world's 16th-smallest nation in terms of land area and 11th-smallest in terms of people. Its capital, Andorra la Vella, is Europe's highest capital city, standing at 1,023 meters (3,356 ft) above sea level. Catalan is the official language, although Spanish, Portuguese, and French are all widely spoken.
Andorra has an estimated 10.2 million tourists each year. Although Andorra is not a member of the European Union, the euro is its official currency. Since 1993, it has been a member of the United Nations. According to the Global Burden of Disease Study, Andorra had the longest life expectancy in the world in 2013, at 81 years; according to the United Nations Development Programme, it had the 23rd-highest in 2019, at 81.9 years.
Employees are entitled to 30 days of paid yearly vacation in addition to public holidays. More vacation days may be included in employment agreements and collective bargaining agreements. A collective agreement or an agreement between the company and the employee is usually used to plan an employee's leave. If no such agreement exists, the employer arranges the leave based on the company's needs. Employees must be told at least 45 days in advance of when they will be on leave.
Unless the employer and employee agree differently, leave must be utilized within the calendar year in which it is earned, however it may be used in the first quarter of the next calendar year in extraordinary circumstances.
The following public holidays are observed in Andorra:
New Year’s Day
Labor Day/May Day
Assumption of Mary
National Day (our Lady of Meritxell)
All Saints’ Day
Feast of Immaculate Conception
Employees are entitled to 12 months of sick leave, which can be extended for up to three years in six-month increments. Employees are paid a varied proportion of their salary depending on how much sick leave they require. Salary is determined by the employee's average daily earnings over the previous 12 months of employment, or minimum pay if no earnings are available.
In the event of multiple births or adoptions, female employees are entitled to 20 weeks of paid maternity leave, plus two additional weeks for each subsequent kid. The expecting woman can start her maternity leave up to four weeks before the due date. Benefits are provided at 100% of a female employee's average daily wages for the previous 12 months worked out of the previous 24 months.
The father receives a portion of the female employee's maternity benefit either after the kid is born or after the female employee returns to work. Beginning six weeks after the birth, the child's father, or the mother's spouse or partner, has the option of taking the balance of the mother's maternity leave.
There are no provisions in the Andorra law regarding parental leave.
The contract may be terminated in the following circumstances: upon the expiration of the term or termination of the work for which the employee was hired; upon mutual agreement of the parties; upon the death or permanent disability of the person worker from performing the work contracted; upon the death, incapacity, or retirement of the employed person; upon the worker's deprivation of liberty by a court; upon the worker's declaration of ban.
The employer may terminate the contract by providing a notice stating that one day per month will be worked up to a maximum of 90 days and that compensation will be paid.
An employee may terminate the contract in the following circumstances: without prior notice during the trial period. The termination comes with ten days notice if the employee has worked for the company for less than a year; plus one day for each month worked, up to a maximum of thirty days if the employee has worked for the company for more than a year; and without prior notice if an accident or force majeure occurs.
There is a one-day notice period for each month of service, up to a maximum of 90 days. Employment contracts may have a variety of various notice provisions. Employees are expected to provide their employer between 14 and 30 days notice of their resignation.
Probation periods must be agreed upon in writing for both indefinite and fixed-term contracts and cannot exceed one month. Probation periods may be up to three months for managerial positions where the agreed remuneration exceeds three times the minimum salary.
If no just cause is established, the discharged employee is entitled to indemnification under Act No. 80, referred to as the "mesada." This payment serves as the sole remedy for an employee alleging unjust dismissal. If an employee is terminated without cause, he or she is entitled to the equivalent of two months' salary plus one week's pay for each full year of service, if the employee has worked for the employer for up to five years. If the employee has worked for more than five years but less than fifteen, he is entitled to three months' salary plus two weeks' pay for each year of service. Employees who have worked for their employer for at least 15 years are entitled to six months' salary plus three weeks' pay for each year of service.
Regardless of the foregoing, an employee hired on or after January 26, 2017 who is terminated without cause is entitled to severance pay consisting of twelve weeks' salary (the Law states "three months," but for the purposes of this calculation, a "month" is defined as four weeks), and an additional amount equal to two weeks' salary for each full year of service. Compensation is capped at nine "months," or thirty-six weeks.
In Andorra, the standard workweek is 40 hours spread over five days. Each week, employees must receive at least one day off and a minimum of 12 hours of rest in between workdays.
A fifteen-day notice is required in advance of any weekly hour adjustment for operational reasons. This is not always the case for managers or executives who have negotiated different terms with their employer. Additionally, each employee is entitled to a 30-minute break at the end of each six-hour workday. Weekly working hours, including overtime, cannot exceed 60 hours per week. Additionally, the maximum daily work period is 12 hours, and the annual work hours must not exceed 1800.
Employees may work up to two hours per day, fifteen hours per week, and fifty hours per month in overtime. However, overtime is permitted only when a staff shortage necessitates that available employees work additional hours or when the business's activities temporarily increase.
Unless otherwise specified in the employment agreement, the payment increases by 20% for overnight work. There will be a 25% surcharge for general overtime up to four hours, 50% for hours between four and eight, and 75% for any additional hours.
Andorra recently increased the national minimum wage to 1,121.47 EUR or 1330 USD per month in 2021. However, the majority of jobs pay significantly more than this minimum and include tips, commissions, and incentives. Employees working night shifts between 10 p.m. and 6 a.m. must earn at least 20% more than the federal minimum wage.
Andorra offers public healthcare that is funded via social security payments, which cover varying percentages of general healthcare expenditures, hospitalization costs, and work-related injury costs. Employers may also provide private health insurance.
The IS, or Impost de Societats (IS), is Andorra's corporate tax, and it has a set general rate of 10%.
There are also other incentives for new businesses:
The settlement cost is reduced by half the first year for every taxpayer.
For taxpayers who are new entrepreneurs of a new business or professional activity and have an income of less than 100,000 euros, the applicable tax rate during the first three years of activity is 5% for the portion of the tax base between 0 and 50,000 euros and 10% for the remainder of the taxation.
Income ranging from 0 to 24,000€ is taxed at 0%.
A salary of €24,000 to €40,000 is taxed at a rate of 5%.
Any amount of income above €40,000 is subject to a 10% income tax rate.
The taxation of savings income is similar to that of income tax, with the exception that the first €3,000 of investment income is tax-free. The remaining income is taxed at a rate of 10%.
Despite being in a customs union with the EU, Andorra is not a member of the EU VAT zone. Andorra implemented the IGI (Impost General Indirecte), the primary value added tax and indirect tax, on January 1, 2013, replacing the sales tax system. Its overall tax rate is 4.5 percent, although some products and services are taxed at different rates.
The super reduced rate of 0% is justified for health and CASS services, education, gold investment, and some NGOs services. Human consumption products, such as books and periodicals, are taxed at a reduced rate of 1%. Transportation, artistic, and cultural services are subject to a special 2.5 percent tax. Banking and financial services are subject to a 9.5 percent tax.
The Andorran government does not require visas for visitors and only requires a passport or European Union national identity card for entry. However, because this country is only accessible through the Schengen countries of France and Spain, it may be necessary to obtain a Schengen Visa or at the very least enter the Schengen area first. Keep in mind that the Schengen visa rules may apply de facto upon arrival. There are no fixed-wing airports in Andorra, but there are commercial helicopter services at heliports in La Massana (Cam Heliport), Arinsal, and Escaldes-Engordany.
A visa is not required for citizens of the European Union to enter Andorra. This country has signed transit agreements with Spain and France, so visitors from any EU country will not need to obtain special permission. The only requirement for EU citizens to enter or leave this country is a passport or an ID card. If the traveler is a citizen of a country that is not a member of the EU but is a member of the Schengen area, he or she must have a valid passport (not only an ID).
The visa requirements for the rest of the citizens who are not part of the Schengen area or the EU may differ slightly, but they are usually simple to understand.
The employment contract must contain a detailed specification of the following details:
Employer name and address.
Employee name and address,
Place of work,
Title or type of work to be performed,
Work hours, rest periods, and breaks,
Salary and payment increments,
Period of notice for terminating the employment relationship, and
Any other relevant details.
Because seasonal labor is widespread in Andorra, there is a regulation in place for foreigners who want to reside and work in the nation for a limited time. A seasonal employee may arrive in the same manner as a tourist does, but they must depart as soon as their employment contract expires.
Foreign nationals who intend to stay in Andorra for longer than 90 days without working may apply for passive resident status. Passive inhabitants must invest in order to contribute to the Andorran economy.
Foreign nationals who live and work in Andorra are considered active residents. Self-employed foreigners and those with contracts to work for local enterprises may apply for active resident permits.
Are you familiar with the procedure for establishing a subsidiary in Andorra? The majority of businesses begin the growth process unaware of all the nuances or applicable legislation. We suggest beginning by determining the location of your incorporation inside Andorra. Different towns or areas may have their own Andorra subsidiary laws, which may make incorporation simpler or more difficult. If you are unfamiliar with relevant legislation, consult a third-party expert who can assist you in selecting the optimal site.
Another critical factor to consider is the form of corporation that would best promote your business objectives. A limited liability company (LLC), a public limited company, a branch office, a representative office, or a holding company may be formed. Each building has its own set of rules, regulations, and restrictions on what is permissible in Andorra. For businesses that want to stay in the nation for an extended period of time and offer a range of services, we suggest forming as an LLC, which allows more flexibility.
The procedure for establishing a subsidiary in Andorra for an LLC consists of the following steps:
1. Obtaining a business name registration
2. Applying for a certificate of incorporation
3. Establishing a business bank account with an Andorran financial institution
4. Placing the whole minimum share capital
5. Applying for an incorporation deed
6. Through a notary, the public document is registered in Andorra's Trade Register.
7. Applying for a Tax Identification Number for your business (N.R.T)
While the LLC form is the most often utilized by multinational corporations, you must still adhere to the correct Andorra subsidiary legislation. You must designate at least one director and two shareholders, who may be of any country, before you may begin functioning. To complete the incorporation procedure, shareholders must deposit a minimum of 3,000 EUR.
After completing all required incorporation stages and adhering to relevant regulations, you must supply your corporate name and the lease for your business's office space. This will assist you in determining which municipal Andorra subsidiary legislation you must comply with. From the moment you begin the Andorra subsidiary establishment procedure to the time it is finished appropriately, it will take around one month.