Asset Management Company in Andorra: Structuring and Optimizing Your Assets
SL, General Holding Company, Article 38: Which Structure for Which Purpose?
Point to Note: The tax advantages of an Andorran holding company—a 10% corporate income tax rate, 0% tax on dividends for resident shareholders, and an inheritance tax exemption—are contingent upon the company having genuine economic substance within the country. A structure without an effective registered office, local accounting records, or documented governance is at risk of being reclassified by foreign tax authorities.
Andorra has one of the most competitive legal and tax frameworks in Europe for the holding and transfer of wealth. Income tax is capped at 10% (Law 95/2010, Art. 41); dividends are fully exempt for Andorran tax residents; there is no wealth tax; and there is no inheritance tax between residents. And for pure active holding structures—the “sociedades de tinença de participacions en societats” (Article 38 of Law 95/2010)—there is a total exemption on dividends and capital gains received from subsidiaries. This guide explains how these mechanisms work, which vehicles support them, and how to implement them correctly.
Your estate deserves custom-designed architecture
A patrimonial limited liability company (SL), a general holding company, or an Article 38 plan: the right vehicle depends on the nature of your assets, your place of residence, and your succession planning goals. Our experts will develop a strategy tailored to your situation.
Get a personalized wealth assessmentDividends: 0% (resident)
Diversified assets
Dividends + capital gains
, 10% max (Law 5/2014)
Why set up a family holding company in Andorra rather than elsewhere in Europe?
The issue of wealth structuring in Europe often boils down to a trade-off between taxation, legal stability, and accessibility. Andorra combines three advantages that few European jurisdictions offer simultaneously: a permanent tax regime—not a time-limited exceptional regime—full compliance with OECD and FATF standards, and geographic and administrative accessibility that contrasts with destinations such as Monaco or Malta.
The Principality has not undergone any drastic tax reforms since the introduction of the personal income tax (IRPF) in 2015. Since then, tax rates have remained stable: corporate income tax (IS) at 10%, general income tax (IGI) at 4.5%, and personal income tax (IRPF) capped at 10% (Law 5/2014, Art. 43). There is no wealth tax. There is no inheritance tax among residents in the direct line of descent. This is not a temporary regime based on a political exception—it is the permanent tax structure of a sovereign state with 77,000 inhabitants that has signed double taxation treaties with France, Spain, Luxembourg, Belgium, the United Arab Emirates, and numerous other partners.
For substantial assets—including equity interests in operating companies, a financial portfolio, life insurance products, real estate, and cash proceeds from a sale—the Andorran holding company offers a framework that combines centralized management, competitive taxation, and a proven track record of legal certainty.
| Criterion | France | ★ Andorra | Luxembourg |
|---|---|---|---|
| Corporate tax | 25 % | 10 % | 17% (SOPARFI holding company) |
| Dividends Received by a Resident Partner | 30% flat tax | 0% (Andorran resident) | Varies by convention |
| Wealth Tax / IFI | IFI up to 1.5% per year | None | None on marketable securities |
| Inheritance tax (direct line) | Up to 45% | 0% (resident heirs) | Varies by place of residence |
| Withholding Tax on French Dividends | — | 5% (2013 agreement) | 5–15%, as agreed |
| Tax Exemption for Dividends from a Pure Holding Company | Mother-Daughter Plan (95%) | 100% (Art. 38 of Law 95/2010) | SOPARFI Exemption |
| Social Security Contributions for Executives | 40–50% | ~22% (CASS) | Variable |
| Regulatory stability | Frequent reforms | Very high | High |
Andorra: Law 95/2010, Art. 41. Personal Income Tax: Law 5/2014, Art. 43. 0% tax on dividends: Law 5/2014, Art. 5.j. 5% withholding tax: France-Andorra Tax Treaty, ratified in 2013. The data for France and Luxembourg are for illustrative purposes only—each situation requires an individualized analysis.
The three vehicles owned by an investment company in Andorra
Andorran estate planning is based on three distinct legal tools, each tailored to a different objective and level of complexity. The choice between them directly determines the tax efficiency and the soundness of the structure.
1. The SL / SLU — the basic structure
The Societat Limitada (SL) is the Andorran equivalent of the French SARL. It accounts for more than 95% of new company formations in Andorra. In its single-member form (SLU), it allows a sole shareholder to manage an asset structure independently with a minimum capital requirement of just €3,000. It is suitable for family or individual estates that wish to hold diversified assets—real estate, investment portfolios, cash—under a single vehicle subject to a 10% corporate income tax rate.
The profits of an SL are taxed at 10% (corporate income tax). Dividends paid to a shareholder who is a tax resident of Andorra are exempt from tax (Law 5/2014, Art. 5.j). This is the most accessible structure, the quickest to set up, and the easiest to manage.
2. The asset holding company (Art. 20) — for equity investment portfolios
When an investment portfolio includes equity interests in French or foreign operating companies, an Andorran holding company at the top of the structure allows for the centralization of dividend flows. Article 20 of Law 95/2010 provides for an exemption on dividends and capital gains from the sale of shares received by an Andorran company—subject to conditions regarding the equity interest and the holding period. French dividends are remitted to the Andorran holding company with a withholding tax of only 5% (2013 Franco-Andorran treaty), compared to 30% under general tax law. The Andorran holding company does not tax them a second time thanks to the internal double taxation relief mechanism.
3. The Article 38 Regime — The Pure Holding Company with Full Tax Exemption
The special regime under Article 38 of Law 95/2010 (regime for holding companies) is the most powerful tool for structures whose sole purpose is to hold equity interests in other companies. It offers a total exemption from taxation on dividends and capital gains from dispositions, with no cap. Unlike a general holding company, an Article 38 company may not own real estate or direct financial assets—it is strictly limited to managing equity interests. In return, no corporate income tax is due on income derived from these equity interests, provided that the subsidiary is subject to a tax rate of at least 40% of the Andorran rate (i.e., 4%), or that there is a double taxation treaty between Andorra and the subsidiary’s country of residence.
| Criterion | SL Heritage | Holding, Art. 20 | Holding Company, Art. 38 (pure) |
|---|---|---|---|
| Minimum Capital | 3 000 € | 3,000 € (SL) or 60,000 € (SA) | 3,000 € (SL) or 60,000 € (SA) |
| Eligible Assets | All types (real estate, securities, cash, etc.) | Equity Interests + Miscellaneous Assets | Participations Only |
| Dividends received from subsidiaries | Subject to a 10% corporate income tax rate (except as provided in Article 20) | Exempt (Art. 20, subject to certain conditions) | Fully Exempt (Art. 38) |
| Capital gains on sales | Taxed at 10% corporate income tax | Exempt (Art. 20, subject to certain conditions) | Fully Exempt (Art. 38) |
| Real Estate Owned | Yes | Yes | No (incompatible with Art. 38) |
| Annual Income Tax Return | Yes (even if the corporate income tax is €0) | Yes | Yes (even if fully exempt) |
| Typical Use Cases | Mixed-use property, 1 building | Dividends from Foreign Subsidiaries | Group with multiple subsidiaries, divestitures |
Andorran Taxation of Wealth: Audited Figures
Before going into detail about the mechanisms, here are the rates and basic rules that apply to an Andorran family holding company—all verified against current law.
| Tax Office | Rate / Rule | Legal Source |
|---|---|---|
| IS (Corporate Income Tax) | 10 % | Law 95/2010, Art. 41 |
| IRPF (personal income tax) — lowest tax bracket | 0% up to €24,000 | Law 5/2014, Art. 43 + schedule |
| Income Tax — flat rate above | 10% (flat rate) | Law 5/2014, Art. 43 |
| Dividends paid to an Andorran resident | 0 % | Law 5/2014, Art. 5.j |
| Withholding Tax on Dividends from France | 5% (Andorran resident) | 2013 France-Andorra Agreement |
| Pure Holding Company Exemption (Art. 38) | 100% dividends + capital gains | Law 95/2010, Art. 38 |
| IGI (Andorran VAT) | 4,5 % | Law 11/2012 |
| Wealth tax | None | Lack of legislation |
| Inheritance Tax (Residents) | 0 % | Lack of applicable legislation |
| Total Social Security Contributions (CASS) | ~22 % | CASS (15.5% employer + 6.5% employee) |
The Internal Double Taxation Avoidance Mechanism
An often-overlooked advantage of the Andorran system: if an Andorran holding company receives income that has already been taxed at source at a rate higher than the Andorran rate (10%), the Andorran corporate income tax is waived. In practice, French dividends received by the Andorran holding company after a 5% withholding tax are subject to only an additional 5% in Andorra (bringing the total to 10%). And under the Article 38 regime, these dividends are fully exempt—so the total tax burden is limited solely to the 5% French withholding tax.
The Special Case of Interest on Invested Capital
Interest earned on capital invested in an Andorran company is subject to corporate income tax at a rate of 10%. However, interest on investments held personally by an Andorran resident is exempt on the first €3,000 and subject to a reduced rate on amounts above that threshold. For significant assets generating substantial interest income, the question of ownership—whether through a company or personally—warrants a case-by-case analysis.
What type of investor benefits most from an Andorran holding company?
Post-sale entrepreneur
→ Holding Company (Art. 38) or SLUProceeds from the sale to be reinvested; dividend cash flows from remaining operating companies. The Article 38 holding company provides full tax exemption for dividends and subsequent capital gains.
Investor / Wealth Manager
→ SL HeritagePassive income, investment portfolio, life insurance. 10% income tax, 0% tax on dividends for Andorran residents, no wealth tax on held assets. Permanent, with no time limit.
Multigenerational family
→ Asset Management Holding CompanyOrganizing the transfer of assets between generations. No inheritance tax applies to Andorran residents. Gradual transfer to heirs through the donation of shares.
Multi-country Executive
→ Holding, Art. 38Equity interests in several operating companies in France, Spain, and the Benelux countries. Centralization of dividends and proceeds from disposals through a fully tax-exempt Andorran entity.
Retiree managing a large amount of assets
→ SL HeritageReal estate assets, financial portfolio, and investments. Personal income tax capped at 10% in Andorra, no wealth tax, and simplified inheritance procedures. And a little-known benefit: pensions accrued before 2015 are virtually tax-exempt in Andorra.
Non-resident seeking to set up a structure
→ SLU (non-resident)An Andorran SLU is available without personal residency. Dividends paid to a non-resident are subject to a withholding tax of 5–15%, depending on the tax treaties. To qualify for the full benefits (0% tax on dividends), actual residency is required.
Étienne, 54 — Sale of an industrial group and asset restructuring
Entrepreneur, former executive of a Franco-Spanish industrial group, three operating subsidiariesÉtienne headed an industrial group with operations in France and Spain—three operating companies, including two subsidiaries he owned directly in his personal capacity. Upon the partial sale of two of these companies, the net proceeds amounted to €8.2 million. The objective was to reinvest within a controlled tax framework, continue to receive dividends from the third subsidiary, and arrange for the transfer of ownership to his two children, who are residents of Andorra. Engage structured an Andorran Article 38 holding company—the SL receives the contributions of securities, qualifies for the special tax regime, and centralizes the dividends from the remaining Spanish subsidiary with a 5% withholding tax (under the Andorra-Spain treaty). The proceeds from the sale were contributed via a share premium. The funds are transferred back to Étienne through gradual repayment—without any Andorran withholding tax. For the transfer, the two children acquired an interest in the company through a gift of shares. There is no Andorran inheritance tax.
— Illustrative Case Study · Engage, 2026
Setting Up a Family Holding Company in Andorra: Key Steps
The formation of an Andorran family holding company follows a structured administrative process. Realistic timeframes range from 10 to 21 weeks, depending on the complexity of the case and the nationality of the partners. Here are the steps in chronological order.
Preliminary Audit and Selection of the Structure
Analysis of the nature of the assets to be structured, the proposed residency regime, existing subsidiaries, and succession objectives. Choice between a wealth management SL, a holding company under Article 20, and the regime under Article 38. This step determines the effectiveness of the structure.
Obtaining a NIA for each nonresident partner
The Administrative Identification Number is required for any non-resident wishing to form or participate in an Andorran company. Processing time: 2 to 4 weeks, depending on nationality.
Name Reservation and Foreign Investment Authorization
Reservation of the company name with the Andorran Companies Registry. Application for a Foreign Investment Authorization (FIA) for non-resident partners. FIA processing time: 4 to 8 weeks.
Opening a Bank Account and Releasing Capital
Opening an Andorran business account (Creand, Andbank, MoraBanc). Bank due diligence on the source of funds. Payment of the minimum share capital. Timeframe: 4 to 8 weeks.
Drafting of the Articles of Incorporation and Notarized Deed
Articles of incorporation drafted in Catalan, the official language of the Principality. Signing of the articles of incorporation before an Andorran notary. Registration with the Registry of Companies and obtaining the NRT.
Application for the Article 38 benefit (if applicable)
For a pure holding company, submit a request to the Ministry of Finance to apply the special regime under Article 38 via the census return. The shares must be registered. The company must provide a detailed breakdown of its equity portfolio in the notes to its financial statements.
Establishment of the Entity and Post-Incorporation Obligations
De facto headquarters, local accounting, annual corporate income tax returns (due by July 31 of year N+1), individual income tax returns (due by March 31 of year N+1), and quarterly general tax returns. Documented governance meetings. It is this substance that ensures the arrangement’s long-term stability.
Sample Reverse Schedule — From Decision to Operational Company
Mistakes to Avoid at All Costs
Neglecting economic substance. An Andorran company without an effective registered office, without regularly maintained local accounting records, and without documented governance meetings may be reclassified as a shell company by the French or Spanish tax authorities. Substance is not a mere formality—it is the key requirement for the validity of the arrangement.
Confusing the company’s residence with the executive’s tax residence. An SL may be incorporated by a non-resident, but the full benefits (0% dividends, no inheritance tax) apply only to shareholders who are actual Andorran tax residents. Confusing the two levels exposes the company to significant tax adjustments.
Failure to comply with reporting requirements in the country of origin. A French resident who has become an Andorran resident remains subject to certain reporting requirements in France: foreign bank accounts (Form 3916) and equity interests in entities outside France (Form 2047). Failure to comply with these requirements may result in substantial penalties.
Underestimating the exit tax. Any French tax resident who leaves France with unrealized capital gains on securities exceeding certain thresholds triggers the exit tax. This mechanism must be planned for in advance—not after the transfer of residence. A poor sequence of events can negate most of the expected tax savings.
Incorporating real estate into an Article 38 structure. The Article 38 regime is reserved for holding companies whose sole purpose is the management and ownership of equity interests in other companies. Adding a real estate asset to the structure disqualifies it from the regime and triggers retroactive taxation under the general regime.
Distributing dividends without actual profits. Under Andorran corporate law, dividends must correspond to the company’s actual profits and be approved by a vote at a general meeting. Distributing dividends without actual profits or a general meeting constitutes an improper disposition of corporate assets—an offense that may be subject to tax and criminal penalties.
The Andorran wealth management entity is not a marketing gimmick—it is a specific legal tool that requires a thorough understanding of Andorran law, international taxation, and reporting requirements in the country of origin. Engage assists residents of various backgrounds and nationalities in structuring and administering their Andorran wealth management vehicles, in coordination with local and foreign tax advisors. Our approach begins with a comprehensive audit before any decisions are made—because the right tool is the one that fits your actual situation, not a generic model.
What’s the best structure for your assets in Andorra?
A patrimonial SL, an Article 20 holding company, or an Article 38 structure: the right choice depends on your assets, your place of residence, and your goals. Our experts will analyze your situation and work with you to design the optimal structure.
Schedule an appointment with an expertFAQ — Heritage Company in Andorra
What is the difference between a patrimonial SL and an Article 38 holding company in Andorra?
A holding company (SL) may hold any type of asset—real estate, financial portfolios, cash, equity interests—and is subject to a 10% corporate income tax on its profits. The Article 38 holding company (Law 95/2010) is a single-purpose structure: it may hold only equity interests in other companies. In return, it benefits from a total tax exemption on dividends and capital gains received from its subsidiaries—provided that those subsidiaries are subject to a comparable tax in their country, or that country has signed a tax treaty with Andorra.
Are dividends from an Andorran company really taxed at 0% for Andorran residents?
Yes, pursuant to Article 5.j of Law 5/2014 on Personal Income Tax (IRPF). Dividends paid by an Andorran company to a shareholder who is a tax resident of Andorra are exempt from taxation. This exemption is permanent—it is not a temporary arrangement. It applies to actual tax residents (those with presence, a home, and the center of their vital interests in Andorra), not merely to those who have registered a domicile there.
Can a non-resident set up a holding company in Andorra?
Yes. Non-residents may establish an Andorran SL, provided they obtain a foreign investment authorization (AIE) from the Govern. However, the full range of tax benefits—0% tax on dividends and no inheritance tax between residents—applies only to shareholders who are Andorran tax residents. A non-resident receiving dividends from an Andorran SL is subject to a withholding tax of 5% to 15%, depending on the applicable tax treaties.
What is economic substance in Andorra, and why is it essential?
Economic substance refers to the operational reality of a company’s presence in Andorra: an actual registered office (not merely a registered address), local accounting records maintained on a regular basis, in-person governance meetings documented by minutes, and a resident or accessible manager. Without substance, the structure may be reclassified as fictitious by the tax authorities of the country of origin—resulting in the collection of evaded taxes, late payment interest, and penalties. Substance is not an option—it is the central condition for the validity of the arrangement.
How does the tax treaty between France and Andorra apply to a wealth management holding company?
The Franco-Andorran treaty, ratified in 2013 and entered into force in 2016, reduces the withholding tax on dividends paid by a French company to an Andorran holding company to 5% (compared to 30% under general law), provided that the Andorran shareholder holds at least 10% of the capital. These dividends are then not subject to further taxation in Andorra thanks to the internal double taxation relief mechanism. The treaty also defines the criteria for Andorran tax residency, which are taken into account by the French tax authorities when recognizing residency outside of France.
Is it possible to pass on an Andorran family-owned business to one's children without paying inheritance tax?
Yes, provided the heirs are themselves tax residents of Andorra. Since there is no inheritance tax in Andorra, the transfer of shares in an Andorran SL to resident heirs takes place without any Andorran tax implications. If the heirs reside in France or another country, the inheritance laws of their country of residence apply. Planning ahead is key: a gradual transfer of ownership to the heirs through the gifting of shares, organized during the founder’s lifetime, allows for the optimization of the transfer over time.
What is a realistic timeframe for setting up an Andorran family holding company?
Between 10 and 21 weeks, depending on the complexity of the case, the nationality of the partners, and the bank’s responsiveness. The main steps that prolong the process are obtaining the AIE (4 to 8 weeks) and the bank’s due diligence (4 to 8 weeks), particularly for capital of non-European origin or derived from major asset sales. It is strongly recommended to plan ahead by 4 to 5 months, especially when the incorporation must coincide with a transfer of tax residence.
