SICAVs, which are very attractive for substantial fortunes, are collective investment institutions which facilitate tax savings. Even if these companies with variable capital are not exclusive to Andorra, they are very interesting tax-saving vehicles, as they are taxed at 0% for corporate income tax. Moreover, dividends paid to Andorran shareholders are also exempt from tax.
Types of SICAV in Andorra
These investment vehicles are authorised and regulated by the Andorran Financial Authority (AFA), the supervisor of the financial system in the country (until 2018 known as INAF).
There are three types of Andorran SICAVs: those that invest in securities, those that invest in property, and a third type, which acts like a hedge fund, offering great investment flexibility and almost complete freedom (for example, through investments in works of art).
Benefits of the SICAV in Andorra
– Collective investment entities are fiscally attractive because they are taxed at 0%.
– They provide investors with a high degree of confidentiality, such that their names do not appear in the register of companies.
– 0% taxation on the distribution of dividends to Andorran shareholders.
Requirements for setting up a SICAV
To set up a SICAV in Andorra, a minimum capital of €1,250,000 is required (rising to €6,000,000 in the case of property).
It should be noted that a non-resident in Andorra can only own 50% of a SICAV. This is so because European countries apply international tax transparency when a taxpayer holds more than 50% of the shares of a SICAV in a country that has not been approved. (Andorra, not being a member of the European Union, is not an approved country for this purpose).
For this reason, obtaining official residence in Andorra prior to setting up a collective investment entity is a good strategy for an investor.