Andorra introduces administrative dissolution for inactive companies

New regulation and sanctioning framework

Authors: Albert Barroso Enrich, Martí Periago

The Andorran Government has introduced a Draft Law establishing an administrative dissolution procedure for inactive companies without liquidation.

The initiative aims to strengthen transparency, anti-money laundering controls and tax compliance.

According to official estimates, around 4,000 companies have not declared their beneficial owners and approximately 2,500 companies may currently be considered inactive.

Which companies may be affected?

The procedure may apply to companies that:

• Have no effective economic activity.

• Have no genuine employees.

• Fail to comply with at least two essential legal obligations during two consecutive financial years.

Administrative dissolution procedure

The Administration will verify whether the company effectively lacks activity and may request information from public authorities, including the CASS.

If inactivity is confirmed, administrative dissolution may be ordered.

Main consequences

• Removal from the Companies Register.

• Tax deregistration.

• Notification to UIFAND.

• One-year director disqualification.

Sanctions

• Failure to report beneficial ownership: €2,500.

• Incorrect information: €5,000.

• False information: €15,000.

• Late filing of annual accounts: €500–€2,000.

Limited regularisation period

Affected companies will have only one month to regularise their situation once the law enters into force.