In general, within the collective imagination, certain types of companies appear more frequently: public limited companies, limited liability companies, and general partnerships, as well as cooperatives. However, there are other corporate structures that can be highly beneficial from a business perspective. A clear example of this is the holding company.
In Andorra, this option is especially attractive thanks to its tax environment, political stability, and favorable legal framework for asset and business management, as explained below.
What is a holding company?
When we talk about a corporate holding, we are referring to an organization made up of several companies in which one of them, known as the parent company, holds control over the rest. Compared to other types of companies, such as limited liability companies, public limited companies, or general partnerships, there are significant differences in their formation, how they operate, and their minimum share capital requirements. However, since a holding is a group structure, the companies within it can take any legal form.
It is also important to distinguish between a holding and a corporate group, as the latter refers to a set of organizations that share common objectives but operate in a decentralized manner, whereas in a holding all decisions and operations are subject to the control of the parent company.
Some examples of corporate holdings that can be seen in Andorra include the different brands owned by Coca-Cola, such as Fanta, Nestea, or Aquarius, as well as various stores within the Inditex group, such as Pull&Bear, Zara, Lefties, or Stradivarius, among others. These are large multinational examples, but smaller holding structures also exist.
Advantages of creating a holding company in Andorra
Creating a holding company in Andorra offers significant advantages for business owners. Beyond the tax benefits, it is also important to consider factors such as the principality’s business environment, succession planning for companies, and asset protection through this structure, as explained below.
Learn how to set up a company in Andorra: requirements, advantages, and business operations between Spain and Andorra.
Read articleTax benefits
One of the main advantages of creating a holding company in Andorra lies in its tax system, which is specifically designed for this type of structure. For example, corporate income tax in Andorra has a maximum rate of 10%, but holding companies may benefit from additional exemptions if they meet certain requirements, such as being subject to a minimum effective taxation of 4% in their country of origin.
In addition, dividends received through these companies are not subject to personal income tax (IRPF), provided that there is a minimum ownership of 5% in the parent company for at least one year. The same applies to capital gains.
The same treatment applies to capital gains obtained from the sale of shares in the holding company, which are tax-exempt as long as the participation has been held for a minimum period.
Another key aspect is Andorra’s network of double taxation treaties — including the one signed with the United Kingdom — which helps eliminate or reduce double taxation on international income and provides legal certainty for cross-border holding structures.
In the current context, this framework has become even more relevant following the abolition of the non-dom regime in the United Kingdom. This regime previously allowed certain residents to be taxed only on income generated within the UK. Since 2025, UK tax residents are generally taxed on their worldwide income, increasing the tax burden for internationally mobile individuals and driving the search for more efficient jurisdictions within Europe.
In this scenario, Andorra stands out as a solid, transparent, and fiscally competitive alternative for structuring international holdings and wealth.
At the same time, Andorra offers a particularly attractive environment for wealth planning, as it does not levy taxes on wealth, inheritance, or gifts, representing a significant advantage compared to other European jurisdictions.
Management and operational benefits
The holding corporate structure allows for the protection and preservation of a company’s assets through certain legal strategies, such as establishing the parent company in the Principality or at least setting up a dedicated entity responsible for managing the holding’s assets.
This protects the assets of the companies within the group, since if one of them faces financial difficulties, the impact on the others is limited.
In addition, from an organizational perspective, coordination and financial management are more efficient within a holding structure. It also facilitates business expansion without losing control over the various subsidiaries that make up the group.
Wealth and succession planning
Another key reason for creating a holding company lies in the generational transfer of a business group. When succession is carried out through this structure, the parent company is the only entity that is fully subject to inheritance tax obligations. Provided that the requirements are met across the other companies, it is possible to reduce the taxable base for inheritance tax by up to 95%.
Favorable business environment and asset protection
Andorra offers a stable and secure business environment, with a strong legal and socioeconomic framework. Confidentiality is a key pillar of the system: shareholder identities are not publicly disclosed, which enhances privacy. In addition, concentrating international assets within a single entity simplifies management and reduces exposure to risks arising from unforeseen contingencies.
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Read moreWhat are the requirements to create a holding company in Andorra?
Before establishing a holding company, it is essential to decide on the legal structure of the parent company and its subsidiaries. The most common options are the public limited company (S.A.) and the limited liability company (S.L.). The S.A., recommended for large corporations, requires a minimum share capital of €60,000, while the S.L., more suitable for smaller businesses, requires €3,000.
Required documentation
One of the most common questions regarding how to set up a holding in Andorra is the documentation required for incorporation. Beyond the registration process itself, several documents must be submitted to the competent authorities, including:
- Registration of the companies that form the group — the parent company must hold at least 5% of the capital of one or more subsidiaries.
- Approval of the holding company’s legal name.
- Proof of bank account opening.
- Incorporation of the company before a notary.
- Registration of the holding in the Principality’s Commercial Register.
- Obtaining the Tax Registration Number (NRT) as the company’s tax identification.
- Registration with the CASS (Andorran Social Security Fund).
Although it is not a mandatory requirement to establish a holding company in Andorra, if the founder intends to reside in the country, they must comply with certain immigration requirements. Depending on the type of residency requested, a minimum stay of 90 or 183 days per year is required.
Due to the complexity and constant evolution of Andorran tax regulations, it is strongly recommended to seek support from a specialized advisor in the Principality’s legal and tax framework. Professional guidance can be key to ensuring compliance and optimizing the incorporation process.
How to create a holding in Andorra step by step
Once we have defined what this type of structure is, its advantages in the Principality, and the essential requirements, it is time to explain how to create a holding in Andorra step by step, from structuring to incorporation and finally opening a bank account.
- Define the corporate structure, determine which companies will form the holding, and which will be the parent company. It is also necessary to reserve the company name by applying for registration of the trade name to ensure no other company uses the same name.
- Draft the company bylaws.
- Submit the name application to the government authorities and obtain approval — the proposal must include three possible names for the holding.
- Register the holding before a notary and record it in the Commercial Register.
- Obtain the NRT as the company’s tax identification number.
- Register with the Andorran Social Security system (CASS).
- Open a bank account for the company, providing justification of the origin of the share capital and the business activity. The minimum required capital depends on the legal structure:
- Limited Liability Company (S.L.): minimum €3,000
- Public Limited Company (S.A.): minimum €60,000
How much does it cost to create a holding in Andorra?
Building a corporate group involves a series of unavoidable expenses. Beyond the variable investments that each company may undertake, there are fixed costs both in the incorporation of the holding and in its annual maintenance. These depend largely on the types of companies involved and their economic activity in each period.
Initial setup costs
- Share capital, which varies depending on the type of company: €3,000 for limited liability companies (S.L.) and €60,000 for public limited companies (S.A.).
- Registration and company incorporation fees, amounting to approximately €850.
- Notary fees for company incorporation and commercial registry registration.
- Professional fees for legal and administrative advisory services.
Annual maintenance costs
- A common tax applicable to all companies on goods and services, regardless of company type, is the IGI (General Indirect Tax), which is equivalent to VAT in Spain and has a rate of 4.5% in Andorra.
- Customs duties on consumption, mainly affecting imported agricultural products.
- Registration fees for economic activity holders, ranging from €200 to €800 depending on the company’s characteristics.
- Contributions to the Andorran Social Security system (CASS), equivalent to 15% of each employee’s salary.
- Accounting audit costs — not always mandatory, but highly recommended.
Legal and tax considerations before creating a holding company
As with any corporate incorporation, establishing a holding company in Andorra is subject to legal requirements defined by current regulations. The most relevant aspects under Andorran law relate to corporate tax, company presence in the Principality, and penalties in case of non-compliance, as outlined below.
Current regulations and legislation in Andorra
The current corporate tax legislation in Andorra, particularly Articles 24 to 37, is the main legal framework governing the creation of holding companies in the country. In this context, certain special regimes have been removed in order to align tax laws with international standards. Above all, it is essential to demonstrate that the holding’s parent company has a real economic presence in the Principality.
Possible consequences of non-compliance
Penalties for non-compliance range from €150 to €3,000 in the case of minor infringements, and from 50% to 150% of the amounts evaded in cases of tax fraud. A relevant point established by law is that the companies forming the holding are jointly liable for tax obligations, except for penalties, which fall exclusively on the parent company.
FAQ
When companies consider how to set up a holding in Andorra, several common questions arise. These include the need for legal advice, the time required to establish the structure, and the ideal corporate setup.
How long does it take to create a holding in Andorra?
The timeline depends largely on the characteristics of the holding, the companies involved, and the founders. Although the usual timeframe is between two and four months, this period is often shorter if one of the companies is already based in Andorra or if one of the shareholders is a resident of the Principality.
Is legal advice necessary?
This type of operation requires specialized knowledge, mainly because it is subject to regulations that frequently change and, in some cases, international legislation. Therefore, while legal advice is not strictly mandatory, it is highly recommended to ensure both a smooth incorporation process and full legal compliance.
What is the ideal structure for a holding?
To create a holding, in Andorra or any other country, there must be a parent company at the top of the structure, regardless of the number of subsidiaries. Ideally, the parent company should hold the majority of shares in the companies that make up the group.
As experts in Andorran legal and tax matters, Augé Legal & Fiscal provides the necessary guidance to design a holding structure in Andorra, plan its creation, and carry out the incorporation process efficiently and in full compliance with Andorran law.
Does creating a holding in Andorra require paying €50,000 to the AFA?
Creating a holding company in Andorra does not automatically require paying €50,000 to the Andorran Financial Authority (AFA). That amount is linked to self-employed active residency (living in Andorra and acting as a company director), not to the incorporation of the company itself.
