Holding company in Andorra: what the law allows, what France looks at

What is a holding company in Andorra?

It is an ordinary Andorran company whose main, or exclusive, activity consists of holding and managing equity interests in other companies. Andorran law does not create a special legal form: Llei 20/2007 only recognises the SA and the SL (art. 1), with minimum capital of €60,000 for an SA and €3,000 for an SL (art. 14). A single-shareholder company adds the letter U to its abbreviation: SAU or SLU (art. 2).

Two uses can be distinguished:

A company is tax resident in Andorra as soon as it is incorporated there, has its registered office there or has its place of effective management there, that is, the place where the general management and control of all its activities are exercised (Llei 95/2010, art. 7). This last criterion matters a great deal for a shareholder who lives in France.

Dividends and capital gains received: the Article 20 exemption

A holding company pays corporate income tax in Andorra at the general rate of 10% (Llei 95/2010, art. 41), but the income from its equity interests is fully exempt from it when the conditions of Article 20 are met. The exemption covers dividends, capital gains on disposal and income from the liquidation of a subsidiary or from certain reorganisations.

Indicative calculation: the law requires a nominal rate of at least 50% of the general Andorran rate of 10%, i.e. 5%.

Four limits apply: no exemption for the capital gain on shares in a company at least half of whose assets consist of immovable property located in Andorra, nor for a dividend that is deductible for the company paying it; no deduction of expenses relating to the exempt holdings, nor of capital losses on the disposal of those shares.

Finally, if the holding company holds more than 50% of a foreign subsidiary whose tax is less than half of the Andorran tax, that subsidiary’s passive income (dividends, interest, royalties, property income) is added to the holding company’s tax base, unless the subsidiary carries on a genuine economic activity or its passive income is limited to a third of its income (tax transparency, art. 17 bis).

The special regime for holding companies

An SA or SL whose exclusive purpose is managing and holding equity interests in companies, Andorran or foreign, can apply for the special regime of Article 38 of Llei 95/2010. Its shares must be registered shares. Dividends received and capital gains on the disposal of its holdings are exempt, with the same limits as under Article 20.

In both cases, the condition on the taxation of the foreign subsidiary is deemed met when it is resident in a country linked to Andorra by a tax treaty. Under the Article 38 regime, profits distributed out of exempt income are also exempt for a shareholder that is an Andorran company. This regime was reformed by Llei 6/2018: the former regime for companies holding foreign equity interests came to an end after a transitional period that ended on 31 December 2020.

Setting up a holding company: authorisation, accounts and costs

The holding company is incorporated like any other company, up to its entry in the Companies Register: see our guide to setting up a company in Andorra. Three points are specific to it:

• The foreign investment authorisation. A non-resident shareholder needs it to acquire shares, except for a holding of 10% or less when foreigners hold less than 25% of the capital (Llei 5/2025, art. 6.1). A holding company held 50% or more by foreigners is itself a foreign investor for its acquisitions of holdings and its property purchases in Andorra (art. 1.1).
• No business licence to obtain. A foreign-owned company must prove an effective activity within 18 months, but registering a business licence is not required of a company whose exclusive purpose is managing its own assets or holding shares or participations (regulation of 9 April 2025, art. 7).
• The other evidence is still required. Annual accounts filed, at least 75% of the amounts announced in the authorisation application (turnover, expenditure or assets), beneficial owners identified, an account in use with a bank established in Andorra (same article).

Capital: Llei 20/2007, art. 14. Fees: the Govern’s “Fase de constitució de la societat” page, consulted on 11 October 2026. The fees of the notary and advisers are not published.

Each year, the company files its annual accounts; under the Article 38 regime, it must also file its tax return even if no tax is due. The calendar is in our guide accounting and obligations of Andorran companies.

A holding company does not give the right to reside

The holding company can, on the other hand, go hand in hand with a residence permit:

• passive residency allows you to manage your own assets and to act as director of the companies in which you hold at least 50% of the capital or equity, provided you are not paid (Llei 9/2012, art. 95.2); shares in Andorran companies are among the eligible assets for the €1,000,000 investment (art. 96.1). See what passive residency allows;
• self-employed residency requires more than 34% of a company that, within three months, holds a registered and active business licence (art. 38 ter): a pure holding company does not meet this condition. See active (self-employed) residency.

Being an Andorran tax resident within the meaning of the treaty also requires staying there for more than 183 days a year, or having the centre of your economic interests or your main activity there; a residence permit is not enough (protocol, point 2). See tax residency in Andorra and, for the sums the holding company then pays you, tax on dividends in Andorra.

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Shareholder resident in France: what France looks at

As long as you remain tax-domiciled in France, an Andorran holding company does not take you out of French tax. Several rules may apply, depending on the facts: the following analysis is to be validated by a professional.

Summary of the texts; their application is assessed case by case.

With a corporate income tax of 10%, an Andorran company is in principle subject to the privileged tax regime within the meaning of French law, according to our analysis. For a holding company that mainly receives exempt dividends and capital gains, the comparison with the tax it would have paid in France is not settled by the texts we have read: this is the first point to have examined.

Article 123 bis targets an entity whose assets consist mainly of securities, receivables, deposits or current accounts: this is the profile of an asset-holding company, and its exception for entities established in the European Union does not concern Andorra. The safe-harbour clause of Article 209 B, for its part, is presumed to be met in the case of an effective industrial or commercial activity, which a pure holding company does not carry on.

Holding a French company through an Andorran holding company

It is possible. On the dividends that the French subsidiary pays to its holding company, France may levy a withholding tax, capped at 5% of the gross amount if the holding company, as beneficial owner, directly holds at least 10% of the subsidiary’s capital, and at 15% in other cases (treaty, art. 10). To this end, the holding company presents a certificate of residence certified by the Andorran tax administration (art. 27).

In Andorra, these dividends are in principle exempt under Article 20, France being linked to Andorra by a treaty. On our reading, the French withholding tax then remains the only tax paid, with no tax credit available in Andorra.

On resale, the capital gain on a holding giving entitlement to 25% or more of the profits of a French company may be taxed in France (art. 13(4)), as may the gain on shares in a company more than 50% of whose value derives from immovable property located in France (art. 13(1)(b)). The other rules are in our guide to the France⁠–⁠Andorra tax treaty.

Transferring your French holding company to Andorra

Legally, Andorra accepts that a foreign company may transfer its registered office there and take Andorran nationality, if the law of its State of origin allows it to retain its legal personality (Llei 20/2007, art. 3); the operation requires a foreign investment authorisation. For tax purposes, the cost arises in France: transferring the registered office to a State that is neither a member of the European Union nor a party to the European Economic Area triggers the immediate assessment of corporate income tax, under the rules provided for in the event of the sale or cessation of a business (CGI, art. 221(2), which refers to Article 201).

For you, as a shareholder, leaving for Andorra with a significant holding may trigger the French exit tax on unrealised capital gains, holding company included. The full pathway is described in our guide to relocating your company to Andorra.

Property holding companies and “SCIs” in Andorra

The société civile immobilière is a form under French law: Andorran company law provides only for the SA and the SL. The corporate income tax law does mention “civil companies” (societats civils), but in order to attribute their income directly to their members (Llei 95/2010, art. 6.3).

To hold Andorran real estate through a company, the main constraint comes from the foreign investment law, which applies to any Andorran company held 50% or more by foreigners:

• it may be authorised to buy a property intended for its own commercial activity (Llei 5/2025, art. 9.3);
• if its capital belongs to a single person, or to relatives linked by marriage, a stable partnership or kinship up to the second degree, it may buy a home within the same limits as an individual, its shareholders being counted within those limits (art. 9.4);
• investments intended for letting a property between a company and persons related to it are prohibited (art. 9.7);
• the capital gain on shares in a company at least half of whose assets consist of Andorran immovable property does not qualify for the participation exemption (Llei 95/2010, art. 20.2).

The taxes due on a purchase are detailed in our guide to buying an apartment in Andorra.

Common misconceptions about Andorran holding companies