The creation of a holding company in Andorra has become one of the most efficient strategies in Europe for asset structuring, centralized management of subsidiaries and international tax optimization.
Thanks to a tax regime of exempt participation, a competitive corporate tax of a maximum of 10% and the network of Agreements to Avoid Double Taxation (CDI), the Principality offers an optimal framework for investors and business groups.
What is a holding company and why establish it in Andorra?
A holding company (known in Andorran legislation as a Company Holding Shares in Foreign Entities) is a legal entity whose main corporate purpose is the holding, administration and management of shares or interests in other companies.
Main reasons to choose Andorra
- Tax exemption for dividends and capital gains: Under the special regime of Article 38 of the Corporate Tax Law (Law 95/2010), dividends repatriated from subsidiaries and capital gains generated by the sale of shares may be 100% exempt.
- Distribution to resident partners at 0%: Dividends distributed by the Andorran holding company to its individual partners who are tax residents in Andorra are not subject to local personal income tax (0%).
Legal certainty and OECD substance: Andorra is not a tax haven; it complies with OECD (Organization for Economic Cooperation and Development) standards and the inclusive framework against base erosion and profit shifting (BEPS).
- Protection and diversification of assets: It isolates the financial risks of each subsidiary, facilitating strategic decision-making from a centralized matrix.
Establishing a holding company in Andorra allows you to optimize international taxation and protect your assets within an environment of full economic substance and legal security.
Legal requirements and conditions for applying the tax exemption
To constitute the holding company and benefit from the exemption regime on dividends and capital gains of subsidiaries, the company must meet a series of requirements in the investee entity and in the structure itself:
- Minimum percentage or amount of participation: Own, directly or indirectly, at least 5% of the share capital or equity of the subsidiary company (or an investment with an acquisition cost greater than 20 million euros).
- Holding period: Maintain the participation uninterruptedly for at least 1 year before or after the dividend distribution or sale.
- Minimum effective taxation at source: The foreign subsidiary must be subject to a tax of a similar nature to the Andorran Corporate Tax (with a minimum effective rate of 4-5%) or be located in a country with which Andorra has a signed Double Taxation Agreement (DTA).
- Economic substance and effective management: To guarantee international validity and avoid the application of anti-abuse rules (CFC or International Fiscal Transparency in countries such as Spain or France), the holding company must have real material and personal resources in Andorra (office, local administrators or board meetings held in the Principality).
Steps for setting up a holding company in Andorra
The process of creating a holding company follows a well-defined administrative itinerary:
Foreign Investment Authorization: Required if the founding partners are not residents of Andorra.
Company name reservation: Application for the company name to the Government of Andorra.
Opening a bank account and depositing capital:
- Minimum share capital of 3,000 € for a Limited Liability Company (S.L.).
- Minimum share capital of 60,000 € for a Limited Company (S.A.).<\li>
Signing of the public deed before an Andorran notary: Granting of the articles of association that include the specific corporate purpose of holding shares.
Registration in the Companies Registry and obtaining the NRT: Commercial Registry and tax registration (Tax Registration Number).
Tax Communication (ATC): Formal notification to the Andorran tax authorities to benefit from the special regime of Article 38 of the Corporate Tax.
Registration with the CASS and commerce: Registration with the Andorran Social Security Fund for administrators or employees and opening of local commerce.
Taxation and advantages of the holding compared to other jurisdictions
Tax Concept | Andorra General Corporate Tax Regime | Holding Regime (Art. 38) |
|---|---|---|
Corporate Income Tax Rate | 10% maximum | 0% on income from qualified holdings |
Dividends from foreign subsidiaries | Taxable at 10% | 100% exempt |
Capital gains from sale of subsidiaries | Taxable | 100% exempt |
Dividends to resident shareholder | 0% Personal Income Tax (IRPF) | 0% Personal Income Tax (IRPF) |
Access to DTA (Double Tax Treaties) | Yes | Yes (with reduction of withholding taxes at source) |
In addition to the dividend exemption, Andorra has a Patent Box regime (reduction of up to 80% in the tax base for income from the transfer of intangible assets and intellectual property), which allows a reduced effective rate of up to 2% for R&D activities or international licenses.
Additional services and professional support
To guarantee compliance with Andorran and international tax regulations, it is essential to support the holding company with specialized services:
- International tax advice: Corporate structure design, analysis of CDI treaties and risk prevention for international tax transparency in countries of origin.
- Accounting management and auditing: Accounting in accordance with the Andorran accounting framework and presentation of reports with the justification of the special regime.
- Administration and substance services: Local operational management, provision of registered office, attendance at board meetings and recruitment of staff if required.
- Tax residency management: Processing of active residence permits (self-employed or employed) or non-profit residence for investors and managers.
Conclusions
The constitution of a holding company in Andorra represents a highly profitable and stable option for multinational groups, family offices and individual investors. By combining the total exemption in the repatriation of profits, the absence of taxes on wealth or inheritance in Andorra and an international network of fiscally transparent agreements, Andorra stands out as a first-class corporate hub in Europe.
To adapt the structure to the specific situation of your group or project, contact us.
