Proving the participation exemption in Andorra: the file to build
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The short answer
The burden of proving the participation exemption lies with the taxpayer. You must document the percentage, the holding period, the tax borne by the subsidiary and the reality of management, before each distribution and at each year-end.
Why a file
For the participation exemption, the burden of proof lies with the taxpayer (art. 20 Llei 95/2010). Without a file, the administration may refuse the exemption, even if the conditions were in fact met.
Documents to keep
| Condition to prove | Useful documents |
|---|---|
| Percentage held (at least 5 %verified on 12/10/2026) | Register of partners or shareholders, articles of association, acquisition or subscription deeds |
| Uninterrupted holding (12 monthsverified on 12/10/2026) | Acquisition dates, securities statements, no intermediate disposal |
| Subsidiary's tax (at least 50 %verified on 12/10/2026 of the general rate) | Tax assessment notice or tax residence certificate, tax return, proof of the applicable treaty |
| Dividend received | Distribution decision, bank statement, withholding tax suffered |
| Reality of management | Minutes, manager's decisions, local accounting (substance) |
Common mistakes
- Acquiring the shareholding less than the required period before the dividend.
- Deducting expenses linked to the exempt shareholding although they are not deductible.
- Offsetting a capital loss on disposal: it is not deductible.
- Forgetting that the exemption of capital gains is excluded if the assets of the company sold consist of Andorran real estate to the extent of 50 %verified on 12/10/2026 or more.
Recommended timetable
- On acquisition: build the file and date the holding.
- Before each distribution: check the holding period and the percentage.
- At year-end: have the gestoria validate the accounting and tax treatment.
- Every year: keep the supporting documents for the applicable limitation period, to be confirmed with your adviser.
First test your case in the holding company simulator, then see the detailed conditions.
One file per shareholding
Set up a binder (paper or digital) for each subsidiary, containing: the acquisition deed, the register of securities at the date of each movement, the subsidiary's registration extract, the subsidiary's approved accounts, the proof of the tax it bears and each distribution decision received. Proof of a holding period of 12 monthsverified on 12/10/2026 is made through the register and the securities statements.
When to update
On each acquisition or disposal, before each distribution and at each year-end: the holding company's accounts are drawn up within 6 monthsverified on 12/10/2026 and filed within 1 monthsverified on 12/10/2026 after approval. See accounting and gestoria.
If the administration asks for justification
Reply with the file, not with explanations: the burden of proof is on you. For a general presentation of the exemption, see participation exemption and the holding company guide.
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
Who has to prove that the exemption applies?
The taxpayer. The administration may refuse the exemption if the file does not demonstrate the conditions.
Which documents prove the holding period?
The register of partners, the acquisition deeds and the securities statements showing no interruption before the dividend falls due.
Are expenses linked to an exempt shareholding deductible?
No. They are not deductible, nor are capital losses on disposal.
Going further
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.