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Andorra
International activity, residency, holding companies, wealth, and tax treaties: how to build a coherent, durable Andorran project.
Content reviewed by the legal and tax team of ProGestió Andorra — Last updated:
Building a business from Andorra while structuring your wealth calls for a joined-up view. The operating company, the director’s residency, subsidiaries, investments, family income, and tax treaties are all interconnected.
International focus from Andorra works when the functions genuinely carried out in the Principality match the legal organisation put in place. A company doesn’t become international just by invoicing in several currencies; it needs identifiable management, resources, contracts, and cash flows.
Wealth structuring, for its part, needs to preserve the separation between the professional activity, shareholdings, and family assets.
| Level | Key question |
|---|---|
| The individual | Where are the director and their family tax resident? |
| The operating company | Where are services carried out and where are the clients? |
| The group | Who holds the subsidiaries, funds the projects, and makes decisions? |
| Wealth | Which assets should stay personal, be pooled, or be transferred? |
A mistake at one of these levels can affect the others. For example, an Andorran holding company can be correctly set up but lose its coherence if every decision is still made in another country.
Before choosing a structure, it’s necessary to describe the business model:
This mapping helps identify permanent establishment risks, VAT or IGI obligations, withholding taxes, and useful treaties.
Andorra generally considers a company resident where it’s incorporated under Andorran law, has its registered office in the Principality, or carries out effective management there.
Effective management isn’t demonstrated by the articles of association alone. It rests on the facts:
Substance needs to be proportionate. An international consulting agency and a family holding company don’t need the same team or premises, but each needs to be able to explain its functions.
These entities serve different purposes.
The operating company invoices clients and bears the costs of the activity.
The holding company holds shareholdings, organises governance, and can reinvest dividends or disposal proceeds.
The asset-holding company can hold certain investment assets, subject to checking the nature of the assets and taxation in the countries involved.
Bringing every function together in a single company reduces the number of entities, but can complicate tax regimes, asset protection, and a future sale. Multiplying companies without reason increases costs and compliance. The structure needs to match actual cash flows.
Intragroup transactions can include:
Each flow needs an economic rationale, a contract, and a pricing method. Dividends don’t pay for a service. Management fees don’t replace a distribution. A loan shouldn’t be used as a permanent personal drawdown.
The applicable tax treaty and the source country determine withholding taxes and additional obligations.
An international director needs to distinguish business travel from their centre of life.
Tax residency is assessed, in particular, based on:
Someone can travel regularly while keeping their tax base in Andorra, but they need to be able to demonstrate it. Conversely, a residence card isn’t enough where family, office, and decisions all remain abroad.
Family assets can include:
For each one, it’s necessary to determine:
1. the country where it’s located;
2. the income it generates;
3. taxation on holding and disposal;
4. the level of risk;
5. liquidity needs;
6. succession goals. Foreign real estate generally remains taxed in its own country, even when held through an Andorran company. Gifting shares can be taxable in the donor’s or beneficiary’s country. The structure doesn’t neutralise foreign rules.
Double taxation treaties play a central role for dividends, interest, royalties, pensions, salaries, and business profits.
They can:
They don’t replace substance and don’t guarantee a zero rate. The treaty benefit needs to match the income’s actual beneficiary and an organisation whose main purpose isn’t to avoid tax.
1. Map out the people, companies, countries, and assets involved.
2. Define the business model over three years.
3. Identify which functions to carry out from Andorra.
4. Choose the right administrative and tax residency.
5. Separate the operating business, shareholdings, and personal assets where useful.
6. Check treaties and withholding taxes country by country.
7. Prepare the bank, the origin of funds, and contracts.
8. Put governance and annual reporting in place.
9. Review the structure with any acquisition, disposal, or family relocation.
Is an international client base enough to justify an Andorran company? No. Where management is based, where services are carried out, and the actual resources involved all need to be consistent too.
Do you always need to set up a holding company? No. It’s useful where there are shareholdings, acquisition plans, or a governance need. A single activity can remain directly owned.
Can you keep a French or Spanish company? Yes. Governance, dividends, the director’s functions, and local obligations need to be organised.
Does wealth structuring remove foreign taxes? No. Assets and income often retain a link to their source country or location.
To go further: Holding company in Andorra, Asset-holding company, International residency, Taxation in Andorra, Andorra · France, Andorra · Spain, Andorra · Luxembourg.
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