An Andorra holding company is one of the most powerful legal structures available to business owners, investors and wealth managers who want to optimise the management of their shareholdings while benefiting from the Principality’s favourable tax framework. With corporate tax capped at 10%, full exemption on qualifying dividends and capital gains, and zero wealth or inheritance tax, Andorra stands out as one of Europe’s most efficient holding jurisdictions in 2026.
What is an Andorra Holding Company?
An Andorra holding company is a legal entity — typically structured as an SL (Societat de Responsabilitat Limitada, equivalent to a UK Ltd) or SA (Societat Anònima, equivalent to a PLC) — whose main purpose is to hold participations in other companies. These subsidiaries can be Andorran entities, European companies or structures located in third countries. The Andorran holding acts as the group’s parent, centralising financial flows (dividends, interest, royalties) and optimising the group’s overall tax structure.
Key Tax Advantages of an Andorra Holding
Dividend Participation Exemption
The most significant advantage: dividends received from subsidiaries are 100% exempt from corporate tax when two conditions are met: the holding owns at least 5% of the subsidiary’s capital (or a stake worth over €20 million), and the participation has been held continuously for at least 12 months. This exemption applies regardless of where the subsidiary is located, provided it is in a country with a tax information exchange agreement with Andorra — which covers virtually all developed economies including France, Spain, UK, Germany, Portugal and the USA.
Capital Gains Exemption on Share Disposals
Capital gains on the disposal of qualifying participations are also fully exempt when the same participation conditions apply (5% stake, 12-month holding period). This is a game-changer for entrepreneurs planning an exit — the entire gain can flow into the Andorran holding with zero corporate tax friction, ready for reinvestment or distribution.
10% Corporate Tax on Operational Income
When the holding also conducts operational activities (consulting, IP licensing, group financing, management fees), these revenues are subject to Andorran corporate tax at just 10% — one of the lowest rates in Europe for a fully regulated, non-offshore jurisdiction. Compare: 25% in France, 25% in Spain, 19-25% in the UK, 12.5% in Ireland.
No Wealth Tax, No Inheritance Tax
Andorra has no wealth tax and no inheritance tax between direct relatives (parents, children, siblings). This makes Andorra uniquely attractive for family holding structures and intergenerational wealth transfer planning — assets held in an Andorran holding can be transmitted to the next generation with near-zero tax friction.
Typical Use Cases for an Andorra Holding
- French/Spanish entrepreneur with operating subsidiary: Dividends from the French or Spanish subsidiary flow to the Andorran holding tax-free (subject to convention withholding rates), then distributed to the Andorran-resident shareholder at 0% personal tax.
- Multi-country real estate investor: SCI or SL property vehicles in France, Spain, Portugal held under the Andorran holding, with dividends and capital gains flowing up tax-efficiently.
- Tech entrepreneur / SaaS business: IP (trademarks, software, algorithms) licensed from Andorra to operating entities, with royalties taxed at an effective rate as low as 2% under Andorra’s patent box regime.
- Pre-exit planning: Transfer participations to Andorran holding before a company sale, managing French/Spanish exit tax with the benefit of Andorra’s 10% capital gains rate.
Economic Substance Requirements
To benefit from Andorra’s holding advantages, genuine economic substance is essential. OECD BEPS rules, EU ATAD directives and Andorran regulations require that the holding company is not a mere shell. This means: a director residing in Andorra (or a qualified local representative), board meetings held in Andorra, strategic decisions made from Andorra, an active Andorran bank account, and a real physical address (registered office or professional domiciliation). Oryzon assists clients in establishing this substance through local directorship, domiciliation and administrative management services.
Frequently Asked Questions
Interested in setting up an Andorra holding company? Explore our company formation services or contact our Andorra tax advisors for a personalised consultation.