How to Open an Andorra Holding Company Bank Account: Bank Rules

Dividend exemption from 5% held for one year

An Andorra holding company bank account receives the dividends and capital gains of subsidiaries, which are often exempt from corporate tax for stakes of at least 5% held uninterruptedly for one year, provided the subsidiary bears comparable taxation. The bank asks for acquisition documents proving the holding period and looks for real management and substance in the Principality.

Andorra's regime exempts from corporate tax dividends and gains from holdings of at least 5% kept uninterruptedly for one year, provided the subsidiary bears comparable taxation. The bank asks for the acquisition documents proving the holding period.

No withholding on dividends paid to foreign shareholders

An Andorran company generally withholds no tax on dividends paid to a non-resident shareholder. The shareholder is still taxed at home, and the bank keeps a record of every distribution together with the relevant shareholders' resolution.

Treaties with France, Spain, Portugal and Luxembourg

Andorra has signed double tax treaties with its neighbours and several European countries. They set the withholding rate on dividends coming up from a foreign subsidiary, provided an Andorran tax residence certificate issued by the tax administration is produced.

French or Spanish subsidiaries: why the EU directive does not apply

Because Andorra is not an EU member, the Parent-Subsidiary Directive does not cover dividends paid by a French or Spanish subsidiary to an Andorran holding. Only the bilateral treaty can then reduce the withholding levied in the subsidiary's country.

Effective management and board meetings in Andorra la Vella

For the holding to be tax resident in Andorra and keep a holding company account in Andorra, strategic decisions must be taken in the Principality. Banks look at board minutes, a resident director, an office and at least one person employed locally.

Intragroup flows: loans, recharges and management fees

Shareholder loans, advances to subsidiaries and management fees charged to the group pass through the holding's account. The bank expects written agreements, arm's-length interest rates and transfer pricing documentation consistent with these movements.

Controlled foreign company rules: Article 209 B in France

An Andorran holding owned by a French company and taxed at 10% may fall within Article 209 B of the French General Tax Code. Shareholders should review this regime with an adviser before opening the account.

Tracing the beneficial owner of a layered structure

When the holding behind an Andorran holding company account is itself owned by a foreign company or foundation, the bank follows the whole chain up to the individuals. A signed group chart, articles of each entity and foreign beneficial ownership register extracts are requested at onboarding.

Opening the holding's account with Creand Crèdit Andorrà

A holding approaching Creand Crèdit Andorrà presents its group chart, the list of participations with acquisition dates, the subsidiaries' latest accounts and its local running budget; the bank then assesses whether the stated flows match a genuine holding activity.

CRS reporting and shareholders' own obligations

A holding with no operating business is often treated as a passive non-financial entity, so its controlling persons are reported to their country of residence under the CRS. French-resident shareholders also declare their Andorran accounts on form 3916.

Andorra holding company bank account: opening step by step

The starting point is the corporate purpose: the holding must own and manage participations, and say so clearly in its articles. Before asking for an Andorra holding company bank account, prepare a simple diagram showing who owns the company, which subsidiaries it controls and which flows are expected. This document is the basis of every discussion with the adviser and the compliance team.

The bank then opens an assessment interview. It wants to understand the origin of the capital, the reason for the structure, the place where decisions are taken and the nature of the flows: dividends, loans, recharges. Expect several exchanges and a meeting in the Principality; timing depends on each institution, the number of ownership layers and the quality of the documents supplied.

Once agreement in principle is obtained, the bank activates the account and sets the payment and access tools. Begin with simple operations backed by supporting documents, such as a dividend documented by a shareholders' resolution. This builds a clean history and limits questions at the first account reviews.

Documents to prepare for a holding company account in Andorra

The standard file comprises the articles, the register extract, the signed group chart, the list of participations with their acquisition dates and the latest subsidiary accounts. Add the minutes of shareholder and board meetings, the list of directors and the local operating budget. Each paper must agree with the others, especially on the percentages held.

For each beneficial owner the bank requests a passport, proof of address, the source of wealth and, where relevant, tax returns. If the ownership chain includes foreign entities, their articles and registers are requested. Depending on the institution, documents issued outside Andorra must be translated, legalised or apostilled: ask for the exact list at the outset.

Finally, prepare the evidence of substance: an office lease, a resident director, the calendar of board meetings held in Andorra la Vella and any local employee. A holding whose only address is a domiciliation with no visible activity attracts many more questions, and some banks decline this type of structure without detailing why.

Andorra holding company bank account: questions for the bank

Ask how the bank handles incoming dividend flows from abroad: accepted currencies, documents requested for each transfer, usual crediting times and related fees. Find out whether it requires proof of a one-year holding to assess the exemption, and in what form it wants to receive evidence of the participations.

Also question it about intragroup flows. Shareholder loans, advances to subsidiaries and management fees call for written agreements, consistent rates and transfer pricing documentation. Ask which documents the bank regards as sufficient and what triggers a request for further justification of a large transfer.

Finally, enquire about periodic reviews: frequency, documents to update, the contact in case of disagreement. Ask whether the bank accepts a non-resident director as a signatory and within what limits. Obtain these answers in writing before incorporating the holding, because they govern the daily operation of the account.

Common mistakes with a holding company account in Andorra

The first mistake is to believe that the dividend exemption removes the need to prove substance. Banks assess effective management through concrete evidence: minutes, local presence, an office. A holding with no real life in Andorra risks being refused the account or, later, having it restricted during a review.

Second mistake: neglecting the rules of the shareholders' country. A holding owned by a French company may fall within anti-abuse rules, and residents of other countries have their own reporting duties. Have the structure studied by an independent tax adviser before filing the account application.

Third mistake: mixing personal flows with those of the company. Movements between the shareholder and the holding must rest on documented loans, dividends or remuneration. Keep clean accounts, retain the shareholder resolutions and answer the bank's update requests promptly.

Keeping the Andorra holding company bank account in good standing

Once the holding company account in Andorra is active, the bank does not close the file: it reviews the structure from time to time and asks for updated documents whenever something has changed. Tell it promptly about a new director, the sale of a participation or any amendment to the articles. Send the holding’s accounts and those of the main subsidiaries every year. Depending on the institution, a request for explanation may also concern an unusual movement; a quick, documented answer prevents the operation from staying on hold during the review.

Keep a tidy follow-up file: minutes of distributions, loan agreements between group companies, evidence for management fees and proof that board meetings were held in the Principality. For an Andorran holding company account, these papers show that the activity still matches the corporate purpose declared at the outset. Ask the bank how long it expects to take over a review and who coordinates exchanges with the holding. A named contact makes the relationship much easier to manage over time.