Substance and effective management of an Andorran company: what the authorities look at
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The short answer
A company's tax residence is judged on its place of effective management, not its address. A resident manager, documented decisions, real activity and local accounting build credible substance; a mere domiciliation is not enough.
The principle
A company's tax residence is judged on reality, not on the address. The France–Andorra treaty (art. 4.3) provides that, where a company is resident in both States, the State where the place of effective management is located prevails. In practice, an authority looks at where decisions are taken, where the managers live and where contracts are signed.
The indicators an inspector looks at
| Indicator | Strong substance | Weak substance |
|---|---|---|
| Manager | Lives in Andorra, works there | Lives in France, comes to Andorra to sign |
| Decisions | Board meetings and decisions documented on the spot | Decisions with no trace, taken by video call from France |
| Resources | Premises, employee or agent, accounting kept locally | Mere domiciliation |
| Contracts | Negotiated and signed from Andorra | Negotiated in France |
| Bank | Andorran account, consistent flows | Flows unrelated to the activity |
What is not enough
- A domiciliation address alone.
- A nominee or a director who signs without real power.
- Minutes fabricated after the fact.
These elements make the case worse: they show that the facade was set up to get around the rule.
What builds credible substance
- The shareholder or manager is genuinely an Andorran resident (active residency).
- Real activity matching the corporate purpose.
- A register of decisions, dated minutes, proof of presence.
- A domiciliation consistent with the resources.
- A gestoria that keeps the accounts locally.
The practical test
Ask yourself this question: if the authorities asked you to prove, day by day over three years, that the important decisions were taken in Andorra, would your file show it? If not, the structure is not ready.
For a non-resident, see setting up a company without living there. For the French angle, see holding company and the French tax authorities.
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Frequently asked questions
What is effective management?
It is the place where the company's strategic and day-to-day management decisions are actually taken. It serves as the residence criterion in the event of a conflict between two States.
Is a domiciliation in Andorra enough?
No. An address without activity, decisions or local resources is an indicator of a shell company.
How can you prove the company is managed from Andorra?
Through the manager's real residence, dated minutes, contracts signed on the spot, local accounting and consistent bank flows.
Going further
- Andorran holding company and the French tax authorities: 123 bis, 209 B, 238 A and effective management
- Setting up a company in Andorra without living there: what is possible, authorised and taxed
- Registered office of a company in Andorra: address, premises and real presence
- France–Andorra tax treaty: what it really provides
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.