Wealth-Holding Companies in Andorra: Taxation

A wealth-holding company in Andorra can be used to organise shareholdings, centralise governance for a family group, and prepare for reinvesting dividends. The term is, however, often used too broadly. A holding company mainly holds shares in other companies; an asset-holding company can, depending on its purpose, manage real estate, cash, or certain investments.

This distinction matters. It determines the structure’s form, its tax regime, the income it can receive, and the obligations it needs to meet. A company that invoices for services, provides financing, directly lets property, and receives dividends doesn’t necessarily fall under the same regime as a pure holding company.

Holding company vs asset-holding company: two different functions

Structure	Main function	Typical income	Point to watch
Pure holding company	Holding shares in companies	Dividends and disposal proceeds	Purpose and income compatible with the chosen regime
Mixed holding company	Holding subsidiaries and carrying out other functions	Dividends, interest, management fees	Standard taxation of non-exempt income and transfer pricing
Asset-holding company	Holding certain family or investment assets	Rent, interest, capital gains, investment income	Taxation in the country where assets are located
Operating company	Selling goods or providing services	Business turnover	Substance, employees, clients, and permanent establishment

The same family may need several entities. It can, for example, be worthwhile to separate the parent company holding subsidiaries from a structure dedicated to real estate or investments. This separation improves clarity, but shouldn’t be created artificially: each entity needs to serve a genuine function.

Why use an Andorran parent company?

A holding company can, in particular, allow you to:

• bring several companies together under common governance;
• organise voting rights among family members or shareholders;
• receive dividends and reinvest them within the group;
• finance an acquisition through a capital contribution;
• prepare for a new investor joining;
• isolate the risks of different activities;
• prepare for the sale of a subsidiary without immediately distributing the proceeds to the individual.

The benefit is therefore as much legal and financial as it is tax- related. A useful structure needs to improve decision-making, cash flow traceability, and the group’s continuity.

What tax regime applies to dividends and capital gains?

Andorra’s general corporate tax rate is 10%. That said, the law provides for exemptions on certain dividends and certain capital gains on shareholdings where conditions are met.

Two mechanisms need to be distinguished.

The general participation regime can require, in particular, a minimum shareholding percentage, a holding period, and sufficient taxation of the subsidiary. For a foreign shareholding, the applicable tax treaty and the distributing company’s level of taxation need to be checked.

The special regime for shareholding companies is reserved for public or private limited companies whose purpose is exclusively managing and holding shareholdings. It needs to be applied for with the authorities. Guidance published in 2025 confirms a strict reading: while the regime applies, income needs to come from this holding activity. Service income or residual income can call its application into question.

The phrase “0% dividends” is therefore misleading when presented without context. There can be:

• tax already paid by the subsidiary on its profit;
• withholding tax in the subsidiary’s country;
• ineligibility for the Andorran exemption;
• taxation at the level of the ultimate shareholder in their country of residence.

The full chain needs to be analysed, subsidiary by subsidiary.

Family succession and governance

A holding company can make the legal organisation of succession easier. Instead of transferring shares in several companies separately, the family can gradually organise ownership of the parent company’s capital.

The articles of association, and a shareholders’ agreement where needed, can set out:

• decisions requiring an enhanced majority;
• conditions for joining and leaving;
• a pre-emption right;
• rules applicable on death or incapacity;
• appointing directors;
• distribution and reinvestment policy.

This organisation doesn’t automatically remove the tax consequences of a gift or an inheritance. The donor’s and beneficiary’s country of residence, and where the assets are located, remain decisive.

Can existing companies be transferred into the holding company?

Yes, but the transaction needs to be studied before it’s carried out. Selling, contributing, or exchanging shares can generate a capital gain, require an independent valuation, change banking arrangements, or trigger a foreign investment authorisation requirement.

Andorra provides a regime for certain reorganisation transactions, but it operates under conditions and doesn’t neutralise the tax rules of the country of departure. A restructuring carried out after a sale has been signed, or with no genuine economic rationale, can produce a very different result from the one expected.

Substance remains essential

An Andorran holding company shouldn’t be just an address. Effective management, investment decisions, documentation of subsidiaries, accounting, and control of the group need to match the organisation described.

Substance can be demonstrated, in particular, through:

• directors who genuinely exercise their authority;
• meetings and decisions made in Andorra;
• a suitable bank account and accounting;
• premises allowing the stated functions to be carried out;
• precise minutes and investment files;
• an economic justification for the presence in the Principality.

The structure needs to remain proportionate. A family parent company holding a single shareholding doesn’t have the same needs as an international group with several subsidiaries.

Steps to set it up

1. Map out existing companies, assets, debts, and cash flows.

2. Define the goal: governance, acquisition, reinvestment, succession, or sale.

3. Choose between a pure holding company, a mixed holding company, and a separate asset-holding structure.

4. Compare the general regime with the special shareholding regime.

5. Check tax treaties and withholding taxes.

6. Study the transfer of existing shareholdings.

7. Set up the company and organise banking, articles of association, and substance.

8. Put accounting, intragroup documentation, and annual monitoring in place.

Frequently asked questions

Is a holding company a specific legal form? No. It’s generally set up as an SL, SLU, SA, or SAU. The term describes its function.

Can it directly own a property? An ordinary company can own a property. Direct real estate ownership is, however, incompatible with the exclusively shareholding-focused purpose required under the special regime.

Can it invoice management fees? A mixed holding company can invoice for genuine, documented services valued at market price. This activity may be incompatible with the special shareholding regime.

Does setting up a holding company grant residency? No. Holding or managing a company and obtaining immigration authorisation are two separate processes.

To go further: Holding company in Andorra, Asset-holding company in Andorra, Setting up an SL, Taxation in Andorra, Active residency.