Do I Need a Local Entity to Hire in Andorra?

In Andorra, a "local entity" refers to a recognized business presence that can act as the employer; typically a subsidiary or branch office. This setup allows you (or a provider acting on your behalf) to be acknowledged locally as an employer and fulfill the country's payroll and employment obligations.

Without a local employing setup, you typically can't do the following compliantly: register as an employer, manage mandatory social security processes, run local payroll with required withholdings, and issue compliant employment terms while ensuring mandatory protections. Andorra's social security administration outlines employer responsibilities for contributions, which is a core part of being an employer in Andorra.

What is Required to Employ Someone in Andorra?

• Local employing entity required to directly employ? Yes (you need to register with the Andorran Financial Authority)
• Payroll registration required? Yes (mandatory for employer and employee contributions)
• Withholding/tax remittance required? Yes (employers must withhold income tax and social contributions)
• Social contributions required? Yes (employers are responsible for social security contributions)
• Local employment agreement required? Yes (written contracts are mandatory in Andorra)
• Mandatory benefits to budget? Yes (statutory leave, health insurance, and other entitlements)
• Works council/collective agreements considerations? Usually (some sectors may have collective agreements)

Best Options If You're Hiring in Andorra

Can I Hire Contractors Instead of Setting Up an Entity?

Yes, but it can be risky if the relationship resembles employment.

Contractors don’t require you to establish a local entity, but Andorra has strong worker protections, and misclassification can lead to significant liabilities if the contractor is effectively functioning as an employee.

The misclassification risk tends to be higher if:

• the work is exclusive or closely resembles employment
• you control hours, location, tools, or methods of work
• the role is integral to your business and the contractor is embedded within your operations

How Long Does Entity Setup Take And What Does It Cost?

Typical entity setup timeline: often takes 4–8 weeks, depending on the type of entity and required registrations.

Ongoing cost categories (entity route):

• Accounting, bookkeeping, and statutory filings: Estimated 300–800 EUR per month ($320–$850)
• Payroll provider: Estimated 50–150 EUR per employee per month ($53–$160)
• Employer registrations and recurring compliance: Varies by complexity
• Corporate tax filings and annual reporting: Estimated 1,000–3,000 EUR per year ($1,070–$3,200)

EOR cost components (no-entity route):

• A per-employee EOR service fee (from $399 p/month with Playroll)
• Pass-through statutory costs (e.g., employer social security contributions)
• Any optional benefits you choose to provide beyond statutory minimums

How an Employer of Record Can Help You Hire in Andorra

Hiring in Andorra can be complex, but it doesn’t have to require setting up a local entity or taking on long-term overhead. With an Employer of Record like Playroll, you get a simple, predictable way to hire compliantly while keeping costs transparent and under control. We help you:

• Hire employees in Andorra quickly without establishing a local entity, eliminating incorporation costs, ongoing administration, and exit complexity.
• Stay fully compliant with local payroll, tax, and employment regulations with Playroll’s payroll services.
• Control your total employment costs, with a clear monthly EOR service fee (from $399 per employee).
• Focus on growing your business, while we manage contracts, payroll, compliance, and labor law obligations end to end.
• Scale up or exit the market easily, without the financial or legal burden of closing a local entity.