In France, the question ‘salary or dividends?’ is a painful trade-off between 45% in social charges and 31.4% flat tax. In Andorra, it changes nature entirely: both routes are light, and the challenge is no longer damage limitation but fine-tuning at the margin — a few percentage points that, over ten years, add up to the price of a flat.
This guide sets out the complete mechanics, the golden rule we apply to every file, and a comparative costing on a real case. It is aimed at directors who have — or are considering — an SL company in Andorra and who are, or are about to become, Andorran tax residents.
The four levies to know
Everything fits in this table. There is nothing else — no additional contribution, no social levies on capital income, no wealth tax.
| Levy | Rate | Base |
|---|---|---|
| Corporate income tax (IS) | 10% | The company's profit, after deduction of your salary. |
| Personal income tax (IRPF) | 0 / 5 / 10% | 0% up to €24,000, ≈5% from €24,000 to €40,000, 10% beyond. |
| Andorran-source dividends | 0% | Exempt from IRPF for a shareholder who is an Andorran tax resident. |
| Social security contributions (CASS) | 22% | On a capped base for self-employed status. |
| Indicative 2026 rates. The effective IRPF rate results from a €24,000 allowance and a rebate capped at €800. | ||
The Andorran dividend is exempt — genuinely
This is the starting point, and it often comes as a surprise. Dividends distributed by an Andorran tax-resident company to a shareholder who is themselves an Andorran tax resident are not subject to IRPF. Not a reduced rate, not an allowance: a full exemption.
The logic is a familiar one: the company has already paid its 10% tax, and the Andorran state considers the profit taxed once and stops there. No economic double taxation, no withholding tax. On €100 of profit: €10 of IS, €90 of dividend, €0 of personal tax.
One essential clarification: the exemption applies to dividends of Andorran source, paid to an Andorran tax resident. A foreign dividend received by an Andorran resident, by contrast, falls within the savings tax base at a rate of 10%. And an Andorran dividend paid to a non-resident will be taxed in their country of residence, under local rules.
CASS: the parameter everyone forgets
This is where it really counts, and it is the least well explained point in the market. The overall contribution rate is 22% — but the base depends entirely on your status.
Employed status: 22% of actual salary
A standard employee contributes on their gross salary, with no cap: 15.5% borne by the employer and 6.5% by the employee, split between the health branch (10%) and the pension branch (12%). Paying yourself a €100,000 salary under this regime costs €22,000 in contributions.
Self-employed status: 22% of a capped base
A director who works within their own company generally falls under the self-employed status regime. And here, everything changes: the contribution base is no longer your actual income. It is pegged to the country's average contribution salary — around €2,670 a month in 2026 — and adjusted in bands (25%, 50%, 62.5%, 75%, 100%) according to turnover and profit, with higher bands (125%, 137.5%) above certain thresholds.
A remarkable consequence: at the highest band, the annual contribution settles at around €9,700. Whether your company generates €150,000 or €500,000 in profit, it no longer moves. Your social security cost is capped in absolute terms — a difference in kind, not merely in degree, from the French system.
Your classification is verified, never assumed
Self-employed or employed status: which one applies depends on your share of the capital, your role, and the reality of your activity. It is confirmed with the CASS, case by case, before the first payslip. A wrong classification can be corrected — but retroactively, and that is never pleasant. The amounts and bands are, moreover, revised every year.
The golden rule: salary beats dividend up to €40,000
Here is the reasoning, in one sentence. A euro paid as salary comes out of taxable profit: it saves you 10% in IS. In exchange, it bears IRPF. So all you need to do is compare the marginal IRPF rate against that 10% of IS:
- From €0 to €24,000: 0% IRPF against 10% of IS saved. Salary wins by 10 points. It is money left on the table if you pay yourself nothing.
- From €24,000 to €40,000: effective IRPF ≈5% against 10% of IS. Salary still wins by 5 points.
- Beyond €40,000: marginal IRPF at 10% against 10% of IS. Perfectly neutral — the choice then rests on criteria other than yield.
Hence the rule we apply by default: a salary of around €40,000, with the balance paid as dividends. Provided, of course, that you are under the self-employed-status regime; under employed status, the 22% CASS on actual salary reverses the trade-off from the very first euro above the strict minimum.
The figures, on €150,000 of profit
Take an SL generating €150,000 of profit before the director's remuneration, sole shareholder, Andorran tax resident, affiliated to self-employed status at the top band. Here is what four different splits produce.
| Salary paid | IS paid | Dividends | IRPF | CASS | Net received |
|---|---|---|---|---|---|
| €0 | €15,000 | €135,000 | €0 | ≈€9,700 | ≈€125,300 |
| €24,000 | €12,600 | €113,400 | €0 | ≈€9,700 | ≈€127,700 |
| €40,000 | €11,000 | €99,000 | €800 | ≈€9,700 | ≈€128,500 |
| €60,000 | €9,000 | €81,000 | €2,800 | ≈€9,700 | ≈€128,500 |
| Indicative 2026 simulation. The optimum is reached at a €40,000 salary; beyond that, the result is identical — the neutrality holds true, as announced. | |||||
Between the worst split (all dividends) and the best, the gap is €3,200 a year. Not spectacular — simply €32,000 over ten years, for a decision that takes five minutes once a year.
Andorra vs France: the same profit, two worlds
Let's take the same €150,000, this time in a French SASU with full distribution.
| Step | Andorra (SL) | France (SASU) |
|---|---|---|
| Profit before remuneration | €150,000 | €150,000 |
| Corporate income tax | €11,000 | €33,250 |
| Personal tax | €800 (IRPF) | €36,660 (PFU 31.4%) |
| Social security contributions | ≈€9,700 | — |
| Net in your pocket | ≈€128,500 | ≈€80,090 |
| Overall tax burden | ≈14.3% | ≈46.6% |
| 2026 assumptions: sole director, full distribution. Andorra: €40,000 salary, 10% IS, exempt dividends, self-employed-status CASS. France: 15% corporate tax up to €42,500 then 25%, PFU at 31.4% (12.8% income tax and 18.6% social levies under the 2026 Social Security Financing Act), no remuneration paid. Indicative simulation: your situation deserves its own figures. | ||
More than €48,000 in annual difference, for identical profit and identical work. This is, very concretely, what the phrase ‘Andorran taxation’ covers. Our tax simulator lets you project your own situation in a few seconds.
Four costly mistakes
- Paying yourself zero salary. This is the most common and most costly reflex: you lose €2,400 of IS savings every year, you build up no entitlement to an Andorran pension, and you deprive yourself of a valuable piece of evidence to demonstrate your actual presence in the event of an audit.
- Over-paying yourself without reason. Beyond €40,000, salary brings no further tax benefit. It can still be justified — getting a mortgage, social security entitlements, a partner's requirements — but it is then a deliberate decision, not an automatic one.
- Distributing without following the formalities. A dividend requires annual accounts closed and approved, a funded legal reserve, and a genuine distributable profit. A transfer from the company account to your personal account is not a dividend: it is a current account advance, and it can be reclassified.
- Confusing the sources of dividends. Only dividends of Andorran source are exempt. Those flowing up from a foreign subsidiary follow a different regime — which is precisely the role of a well-structured Andorran holding company: to deal with this question upstream.
The calendar: when to decide, when to pay
Remuneration is decided before the financial year, not after. A salary cannot be made up retroactively: it is paid month by month, with its payslips and CASS filings. The dividend, by contrast, comes afterwards, once the accounts have been closed.
- January: setting the year's salary and CASS band.
- Every month: payslip and CASS filing.
- First half of the year: closing and approval of the annual accounts, distribution decision.
- July (year-end of 31 December): corporate income tax return.
- 1 April – 30 September: personal IRPF return.
This is exactly the rhythm our accounting service manages: every deadline anticipated, no decision made in a December rush.
And if you are not yet an Andorran tax resident?
Then the equation above does not apply to you. The dividend exemption exists only for the Andorran tax resident: paid to a non-resident, the same dividend will be taxed in their country of residence, at local rates. An Andorran company held from France produces no advantage; it mainly produces risk.
Remuneration is therefore not the first question: tax residency is. And once you have settled, it must be documented — which is the subject of our guide on proving residency to the French tax authorities.
Key takeaways
- Andorran-source dividends: exempt from IRPF for the Andorran tax resident
- IRPF: 0% up to €24,000, ≈5% up to €40,000, 10% beyond
- CASS: 22%, but on a base capped for self-employed status (≈€9,700/year at the top band)
- Golden rule: salary up to €40,000, balance as dividends
- Beyond €40,000, salary and dividend are tax-neutral
- On €150,000 of profit: ≈€128,500 net in Andorra versus ≈€80,100 in France
- No exemption without genuine Andorran tax residency
The right balance depends on three variables: your CASS regime, your need for regular income, and your financing plans. We set it with you at the start of the financial year, then adjust it annually — five minutes of decision-making for several thousand euros.
Setting up your structure? Start with the right vehicle: our company formation page details the steps, timelines and real costs.
