Andorran holding company and the French tax authorities: 123 bis, 209 B, 238 A and effective management
- Updated on
- La rédaction
The short answer
An Andorran holding company owned from France is exposed to the French rules on entities under a privileged tax regime (123 bis, 209 B, 238 A) and to effective management. Only genuine, documented residence outside France changes the analysis.
Why this page is the most important
Most content on Andorran holding companies presents the exemption and stops there. For a taxpayer linked to France, it is the French side that decides the outcome. Here are the mechanisms to know, without distorting them.
The four French mechanisms
| Mechanism | Who is targeted | Principle |
|---|---|---|
| Art. 123 bis CGI | Individual domiciled in France holding at least 10 %verified on 12/10/2026 of a foreign entity under a privileged tax regime, whose assets are mainly financial | The entity's income may be taxed in France, as if it had been distributed |
| Art. 209 B CGI | French company subject to corporate income tax holding a foreign subsidiary under a privileged regime | The subsidiary's profits may be taxed in France |
| Art. 238 A CGI | Payments to an entity under a privileged regime | Defines the privileged regime (tax lower by more than half than French tax) and reverses the burden of proof for the deduction of expenses |
| Abuse of law and effective management | Any structure without economic substance | Requalification, taxation at the actual place of decision-making |
Is Andorra a "privileged regime"?
The notion in article 238 A compares the tax actually borne with what would be due in France. With an Andorran general rate of 10 %verified on 09/10/2026 against the French rate of 25 %verified on 09/10/2026, the gap exceeds half the French rate. The risk of qualification must therefore be taken seriously as soon as a French person or company is in the chain. The exact calculation depends on the tax base and the regimes applied: it is done case by case.
A useful clarification: Andorra is not on the French list of non-cooperative states and territories (ETNC) (order of 15 April 2026, 11 entities). Being "privileged" within the meaning of article 238 A and being "non-cooperative" are two different notions.
The case that works: a genuine departure
If the shareholder has transferred their tax domicile outside France, the domicile test of article 4 B of the CGI and the France–Andorra treaty determine residence. The file must then be solid: leaving France, formalities and exit tax if the shareholdings exceed 800,000 €verified on 09/10/2026.
The case that does not work: staying in France
An Andorran holding company owned by a French resident who continues to manage it from France combines the risks: taxation of dividends in France (at the flat-rate levy, whose rate was raised by the social security financing act for 2026), application of article 123 bis, effective management in France, abuse of law. No lasting tax gain justifies this risk.
What genuinely protects you
- Genuine residence, with proof of presence and of centre of interests.
- Decisions actually taken in Andorra: see substance and effective management.
- A documented economic justification for the holding company.
- A file of evidence for the exemption of shareholdings.
- An annual review by an adviser who knows both countries.
Checks on the Andorran side
The Andorran authorities also check residence: see tax audits and Andorran residence.
Main guide: holding company in Andorra.
Work out your own case
Free simulators, built on the official values of this page.
- Andorran holding simulator: exemption of dividends from shareholdingsDoes your dividend meet the exemption conditions? Tax avoided and net amount kept.Open
- Cost of an employee and corporate tax in Andorra: calculatorEmployer contributions, net pay before tax and a company's corporate tax.Open
- Quiz: which residency status in Andorra?A few questions, a clear lead towards the right status.Open
Frequently asked questions
Does article 123 bis of the CGI apply to an Andorran holding company?
It may apply to a person domiciled in France who holds at least 10 % of a foreign entity under a privileged tax regime whose assets are mainly financial. It depends on the facts.
Is Andorra a tax haven for France?
It is not on the ETNC list in the order of 15 April 2026, but its general rate of 10 % puts it below half the French rate of 25 %, which exposes it to the privileged tax regime.
Can a French company hold an Andorran subsidiary?
Yes, but article 209 B may tax the subsidiary's profits in France if it falls under a privileged regime and the control conditions are met.
What is the risk if the holding company is managed from France?
Taxation in France on the basis of effective management, application of the anti-abuse rules and, in serious cases, abuse of law.
Going further
- Holding company in Andorra: complete guide (taxation, exemption, setup, risks on the French side)
- Substance and effective management of an Andorran company: what the authorities look at
- Leaving France for Tax Purposes for Andorra: Tax Residence
- Exit Tax: Company Directors and Shareholders Leaving France for Andorra
- Tax audit of an Andorran resident: what France can check
Official sources
This information is general and is not personalised legal, tax or financial advice. It is verified as of the date shown and may change.