Key Takeaways
- An Andorran holding pays 10% corporate tax, with a participation exemption on qualifying dividends and share gains.
- Dividends from an Andorran company to an Andorran-resident owner are tax-free.
- It only works with real substance: a real office, a resident director deciding in Andorra, proper accounting.
- Without substance, foreign CFC and anti-abuse rules tax the income as if the company did not exist.
- It does nothing for you if you are still tax resident somewhere else — the company follows the person.
An Andorran holding company can be an effective way to hold shares, receive dividends and manage investments at a 10% corporate rate, with 0% tax on dividends paid on to an Andorran-resident owner. But it only works with genuine economic substance — a real office, a resident director, actual decision-making in Andorra — and only when you yourself are genuinely Andorran tax resident. Shell structures fail, and other countries’ anti-abuse rules will unwind them.
What an Andorran holding company is for
A holding company (often an SL or SLU) that owns shares in other companies, real estate, or an investment portfolio. Used properly by an Andorran-resident owner, it offers:
- 10% corporate tax on the holding’s taxable profit (3% minimum effective rate).
- Participation exemption: dividends and capital gains from qualifying shareholdings in other companies can be exempt at the holding level, subject to conditions.
- 0% on the dividend to you — distributions from an Andorran company to an Andorran tax resident are tax-free.
- A clean structure for succession, given Andorra’s 0% inheritance tax.
Substance is the whole game
Andorra requires companies to have real economic substance, and so do the countries your income comes from. In practice that means:
- A genuine office in Andorra — not a plaque on a lawyer’s door.
- A director who actually lives in Andorra and makes the decisions there — board meetings, contracts, banking, all run from Andorra.
- Local accounting and filings, kept properly and on time.
- Activity that matches the company’s stated purpose.
- Enough people and cost to make the activity plausible — a large holding run by one part-time person invites challenge.
If the substance is thin, foreign tax authorities apply controlled-foreign-company (CFC) rules, beneficial-ownership tests in treaties, and general anti-abuse doctrines to tax the income as if the holding did not exist — and they increasingly do.
The personal residency point
An Andorran holding company does nothing for you if you are still tax resident somewhere else. If you live in Spain and set up an Andorran holding, Spain taxes you on it. The structure only delivers when the owner has genuinely moved to Andorra — more than 183 days, centre of vital interests, the whole life shifted. The company follows the person, not the other way around.
When a holding company makes sense — and when it doesn’t
- Makes sense: you have relocated to Andorra, you hold operating businesses or a substantial portfolio, and you want a single vehicle to consolidate, reinvest and eventually pass on — with real management in Andorra.
- Doesn’t: you want to keep living abroad and route income through Andorra; you cannot or will not put real management in the country; the assets are small enough that the company’s running costs outweigh the benefit.
Costs and admin
Expect similar setup costs to any Andorran company — around €7,000 to incorporate — plus ongoing accounting (€150–300+ a month depending on complexity), an office, and a director’s time. Corporate tax returns and, where relevant, IGI filings are annual obligations.
Frequently asked questions
How is an Andorran holding company taxed?
At the 10% corporate rate (3% minimum effective), with a participation exemption that can make qualifying dividends and share gains tax-free at the holding level. Distributions to an Andorran-resident owner are then tax-free.
Do I need real substance for an Andorran holding company?
Yes. A real office, a resident director making decisions in Andorra, local accounting and genuine activity. Without substance, foreign anti-abuse and CFC rules will tax the income as if the company did not exist.
Can I use an Andorran holding company while living abroad?
Not effectively. If you are tax resident elsewhere, that country taxes you on the structure. The holding only works once you have genuinely relocated to Andorra.
What does it cost to run an Andorran holding company?
Around €7,000 to incorporate, plus ongoing accounting from €150–300 a month, an office, and director time.
Last reviewed: 3 September 2026. General information, not legal or tax advice; corporate and anti-abuse rules change and this page may become out of date. Structure this with an Andorran tax adviser and advice in the countries your income comes from. Speak to our team.
