On paper, the idea is appealing: an Andorran company taxed at 10%, dividends at 0%, and life carrying on in France. In practice, this is the scheme most often requalified by the French tax authority. A serious gestoría tells you beforehand, not afterwards. Here are the four legal locks you need to know — then the only way to genuinely benefit from the Andorran framework, in full legality.
Lock #1: a company is taxed where it is managed
The place of incorporation does not determine a company’s tax residence. The decisive test, set by article 4 of the Franco-Andorran tax treaty of 2 April 2013, is the place of effective management: where the strategic decisions are actually made. An Andorran SL whose director lives in Toulouse, signs contracts from his living room and runs everything remotely has its place of effective management… in France. It becomes taxable there like a French company: corporate tax at 25%, VAT at 20% — and, since the activity was never declared in France, the reassessment comes with a surcharge of up to 80% (undeclared activity) and an extended audit period. The hoped-for saving turns into a liability.
Lock #2: the permanent establishment
Even when properly managed from Andorra, a company remains taxable in France on the activity it physically deploys in France. This is the concept of the permanent establishment (article 5 of the treaty): a fixed place of business — office, workshop, shop, building site — or a dependent agent who habitually concludes contracts in the company’s name. A salaried sales rep based in France, an own logistics warehouse, premises open to customers: any one of these can be enough to bring the corresponding profits into the French tax net. Structuring must start from the reality of your operations, not from the address of the registered office.
Lock #3: freelancers and consultants — article 155 A
The scheme “I stay in France, my Andorran company invoices my services” has its own dedicated article in the French tax code: 155 A. When services are performed by a person domiciled in France but invoiced by a foreign entity that person controls, the sums are taxable in France, directly in the person’s name — as if the company did not exist. In other words: as long as the service provider works from France, interposing an Andorran company changes nothing about their tax… except for the worse, penalties included.
Lock #4: passive holdings — article 123 bis
The last classic case: parking a portfolio (securities, crypto, cash) in an Andorran structure while remaining a French resident. Article 123 bis of the French tax code targets precisely stakes of at least 10% in a foreign entity under a privileged tax regime whose assets are mainly financial. Andorra, with its 10% corporate tax versus 25% in France, meets the definition of a privileged regime (taxation at least 40% lower than the French equivalent). The result: the structure’s profits are deemed distributed and taxed every year in the hands of the French resident, even without any distribution. Add banking transparency: Andorra has applied the automatic exchange of information (CRS) since 2018 — your tax authority sees those accounts.
So how do the successful ones do it?
They align three realities: the director, the management, the substance. The table below sums up the three scenarios we encounter:
| Scheme | Analysis | Verdict |
|---|---|---|
| Stay in France, run the Andorran company remotely | Effective management in France → CT 25%, VAT, surcharges up to 80% | Ruled out |
| Genuinely relocate and manage from Andorra | The safe scheme — CT 10%, Andorran dividends at 0% | Recommended |
| Andorran head office + physical operations in France | Permanent establishment: French profits remain taxed in France | To be structured case by case |
| Indicative analysis, 2026 — every situation calls for a personalised review with your adviser. | ||
The safe route is also the simplest: genuinely become an Andorran resident — more than 183 days a year in the Principality, the centre of your interests there — and give the company coherent substance: premises suited to the activity, accounts kept in Andorra, decisions made and documented locally. On that condition, the Andorran framework delivers everything it promises, in full compliance: 10% corporate tax, exempt dividends, the 2013 treaty as protection. That is what our company formation and tax residency pages are about.
Our position as a gestoría
We do not set up empty shells — not out of excessive caution, but because they do not work: they cost more in reassessments than they save in tax. On the other hand, for an entrepreneur, an e-commerce owner or a consultant ready to genuinely settle in Andorra, we build the whole package: company, residency, substance, accounting — a solid, documented, incontestable file.
Key takeaways
- The place of incorporation does not matter: a company resides where it is actually managed (2013 treaty, art. 4)
- Managed from France: CT 25%, VAT, surcharges up to 80% (undeclared activity)
- Services performed from France: taxed in the provider’s name (art. 155 A)
- Passive holding owned from France: profits deemed distributed (art. 123 bis)
- The safe route: genuine Andorran residency (> 183 days) + local management and substance
Hesitating between staying in France and taking the step? We model both scenarios — tax, charges, cost of the structure — so the decision rests on facts, not promises. See also our guide Andorra for digital nomads.
