Holding in Andorra 2026: IS at 10%, dividend exemption and patent box

Last updated: May 2026

A holding company in Andorra is taxed under section 10% of the Corporate Income Tax.This structure offers an exemption of up to 100% of dividends received from subsidiaries and a patent box regime effective at 21% of intellectual property income. It is the preferred structure for international entrepreneurs and investors who centralize management from the Principality.

This guide explains exactly what it is, how much it saves compared to a holding company in Spain or Luxembourg, what requirements the OECD demands for it to be valid, and when it makes economic sense to set it up.

What is a holding company in Andorra and why use one?

A Andorran holding company It is a company (SA or SL) incorporated in the Principality whose corporate purpose is the holding and management of shares in other companies. It does not produce goods or sell services directly: its function is to be the parent company that groups the operating subsidiaries.

The reasons for choosing Andorra over other common jurisdictions (Luxembourg, Netherlands, Ireland) are:

• Lower IS rate: 10% compared to 24.9% in Luxembourg, 12.5% in Ireland or 25% in Spain
• Absence of wealth and inheritance taxes: key to intergenerational planning
• OECD and FATF white list: Andorra is not considered a tax haven — dividends from Andorra are not subject to special withholding tax in Spain (CDI 2016)
• No withholding tax on dividends: Andorra does not apply withholding tax on dividends paid to non-residents (under the conditions of the Double Taxation Convention).
• Possible real substance: The cost of living and settling in is low compared to Luxembourg or Switzerland

Andorran IS at 10%: how the holding company is taxed in practice

Country	IS type	Dividends received	Patent box	Withholding dividends on outflow
Andorra	10%	100% (exemption)	2% (patent box)	0%
Spain (ETVE)	25%	95% exemption	It doesn't exist.	0%*
Luxembourg	24,9%	100% (exemption)	5.2% (patent box)	15%*
Ireland	12,5%	Participation exemption	6,25% (KDB)	25%*
Netherlands	19-25,8%	100% (exemption)	9% (innovation box)	15%*

(*) Withholding tax on departure can be reduced or eliminated via a double tax treaty. Andorra has double tax treaties with Spain (5%/15%), Portugal, France, Luxembourg, and others.

Participation exemption: dividends exempt from 100%

The Andorran corporate income tax exemption regime allows dividends received from subsidiaries and capital gains from the transfer of shares to be exempt from Andorran corporate income tax. exempt from 100%provided that these conditions are met:

• Minimum participation of 5% in the subsidiary's capital (or acquisition value exceeding €20 million)
• The subsidiary is taxed under a tax of a similar nature to the Andorran corporate income tax (excluding non-cooperative tax havens)
• Participation is maintained uninterrupted for at least 1 year
• The holding company has real economic substance in Andorra (it is not a shell company)

Without a participation exemption, dividends are taxed at the general rate 10%. Even in that case, the effective rate remains lower than the Spanish or European average rate 25%.

Patent box al 2%: for intellectual property companies

The patent box regime Andorra reduces the effective tax rate on income derived from the transfer or exploitation of intellectual property rights to 2% (80% reduction on the general rate of 10%).

Assets that can be included in the Andorran patent box:

• Registered invention patents
• Computer programs (software) with recognized copyrights
• Registered industrial designs and models
• Trade secrets with proper documentation

The requirement is that the assets have been developed (at least partially) by the company itself in Andorra — this is the OECD standard. Nexus Approach of the BEPS Action 5 Plan. Buying an already developed asset and putting it in an Andorran patent box without real activity is not valid.

Economic substance requirements: what the OECD requires

Since 2018, Andorra has applied the OECD's BEPS standards. Any Andorran holding company must demonstrate compliance. real economic substance in the country so that the tax benefits are recognized internationally:

• Effective address from Andorra: The board of directors must meet regularly in Andorra and strategic decisions must be made there.
• At least one full-time employee (This can be the managing partner himself if he or she resides and effectively works from Andorra)
• Real and operational office in Andorran territory (not a tax domicile without activity)
• Proportional operating expenses a la actividad declarada — revisados por Tributs d’Andorra
• Accounting and banking records maintained in Andorra

A "paper" holding company with no real presence can be reclassified by the Spanish Tax Agency (or that of any other country) as a tax resident in that country, losing all the benefits of Andorran corporate income tax.

Cost and break-even point: when does it make sense?

The annual costs of an Andorran holding company are:

Concept	Detail	Approximate cost
Constitution (one time only)	Notary, CCIS, registration fees	€3,000–6,000
Annual accounting	Deposit of accounts, audit if applicable	€2,000–4,000
Tax/legal advice	IS declaration, procedures	€3,000–6,000
Office/Home	Shared or private office	€2,400–12,000
CASS administrator	If the partner is an active resident	~2,400–3,600 €
Estimated annual total		€8,000–20,000

Approximate break-even point: With a corporate income tax rate in Spain of 251% and a 3% tax rate in Andorra versus 101% and a 3% tax rate in Andorra, the savings amount to 151% and a 3% tax rate on net profit. For the fixed costs of €10,000/year to be justified, the holding company must generate a taxable profit of at least €65,000–€100,000/yearAbove that threshold, savings grow linearly.

How to set up a holding company in Andorra step by step

• 1. Define the structure: Decide whether the company will be a public limited company (SA) (minimum capital €60,000) or a private limited company (SL) (minimum capital €3,000). For most family or investment holding companies, an SL is sufficient.
• 2. Verify the substance: confirm that the managing partner will reside in Andorra or that a genuine local employee will be hired
• 3. Company name and purpose: register the name in the CCIS and draft the corporate purpose including "holding and management of shares"
• 4. Notary: to grant a deed of incorporation before an Andorran notary with the articles of association
• 5. Commercial Registry: Registration with the CCIS and obtaining the NRT (tax registration number)
• 6. Opening a bank account: en MoraBanc, Creand o BancSabadell d’Andorra — requiere documentación AML
• 7. Registration in Tributs: Declaration of commencement of activity and registration as a taxpayer of Andorran Corporate Income Tax