Why Choose Andorra for Your Holding Company
Andorra has emerged as a competitive jurisdiction for international holding structures. The country offers favorable tax treatment combined with a straightforward regulatory framework that attracts high net worth individuals and corporate investors.
The principality provides a special tax regime specifically designed for holding companies. This regime includes participation exemptions on dividends and capital gains without minimum ownership or holding period requirements, making it particularly attractive for portfolio management.
Andorra has expanded its double tax treaty network significantly. The country now has agreements with Spain, France, Portugal, Luxembourg, Liechtenstein, Cyprus, Malta, the United Arab Emirates, and several other jurisdictions, reducing withholding tax risks on international investments.
Tax Benefits of Andorra Holding Companies
The standard corporate tax rate in Andorra is 10 percent. However, holding companies that qualify for the special regime can benefit from significant tax advantages that reduce their effective tax burden substantially.
Holding companies authorized under the special regime are exempt from taxes on dividends received from foreign subsidiaries or companies. Dividends paid to the holding company's shareholders, whether resident in Andorra or abroad, are also exempt from taxation.
The participation exemption applies to both dividends and capital gains derived from the transfer of shares. This exemption has no minimum ownership threshold or holding period requirement under the special holding regime, which is more flexible than many competing jurisdictions.
Participation Exemption Requirements
To qualify for dividend and capital gains exemptions, subsidiaries must meet specific conditions. The subsidiary must be subject to a tax equivalent to Andorran corporate income tax at a nominal rate of at least 40 percent of the general rate, which equals 4 percent.
Alternatively, the subsidiary can be resident in a country with which Andorra has entered into a double tax agreement. This provides flexibility for structuring international investments across multiple jurisdictions within the treaty network.
Under the standard participation exemption regime, companies must hold more than 5 percent of shares in the subsidiary. These shares must have been held for a period of over one year on the day of distribution or transfer, though the special holding regime waives these requirements entirely.
