SICAV in Andorra: A Flexible and Confidential Investment Vehicle for High Net Worth Individuals

Andorra offers a range of financial vehicles tailored to the needs of High Net Worth Individuals (HNWIs). Among these, the SICAV (Sociedad de Inversión de Capital Variable) stands out as a sophisticated and highly flexible option for asset management. In this blog, we explore the key features, benefits, and functionality of SICAVs in Andorra, and compare them with other corporate structures such as SA (Societat Anònima) and SL (Societat Limitada).

What is a SICAV?

A SICAV is a collective investment scheme that pools capital from multiple investors to manage and grow wealth in a tax-efficient and professional manner. These investment companies are regulated and must comply with the standards set by Andorra’s financial authority, the Autoritat Financera Andorrana (AFA).

Key Features of a SICAV in Andorra:

1. Variable Capital: The capital of a SICAV is flexible, allowing for the issuance or redemption of shares as investors enter or exit the fund.

2. Professional Management: SICAVs are typically managed by licensed asset managers, ensuring sophisticated and well-diversified investment strategies.

3. Tax Efficiency: SICAVs benefit from a 0% corporate tax rate, making them highly attractive for wealth preservation.

4. Confidentiality: Investors' names are not listed in public company registries, ensuring a high degree of privacy.

5. Regulated Structure: SICAVs operate under strict regulatory oversight, providing transparency and security to investors.

   
   

Benefits of Establishing a SICAV in Andorra

1. Tax Optimization: SICAVs enjoy significant tax advantages, including a 0% corporate tax rate. Additionally, dividends distributed to Andorran shareholders are tax-exempt.

2. Flexibility: The variable capital structure allows investors to adapt their contributions based on market opportunities and personal needs.

3. Wealth Consolidation: Ideal for managing family wealth or grouping assets under a single investment vehicle.

4. Confidentiality: The structure ensures that investors' identities remain private, as their names are not listed in public records.

5. International Reputation: Andorra's financial framework is recognized for its stability, making SICAVs an excellent option for cross-border investments.

   
   

Comparison: SICAV vs. SA and SL in Andorra

While SICAVs are designed for investment purposes, SA (Societat Anònima) and SL (Societat Limitada) are corporate structures primarily intended for conducting business activities. Here is a detailed comparison of these structures:

Feature	SICAV	SA	SL
Objective	Investment management	Medium to large-scale business	Small to medium-sized business
Capital Structure	Variable capital	Fixed capital	Fixed capital
Tax Benefits	0% corporate tax; tax-exempt dividends for Andorran shareholders	Standard corporate tax rate of 10%	Standard corporate tax rate of 10%
Minimum Capital	€1,250,000 (€6,000,000 for real estate investments)	€60,000	€3,000
Management	Professional asset managers	Board of directors	Owners or directors
Confidentiality	High; investors' names are private	Standard; shareholders may appear in public records	Standard; owners' names may appear in public records
Regulation	Strictly regulated by AFA	General corporate regulations	General corporate regulations

When to Choose a SICAV?

A SICAV is the ideal vehicle if:

• You have substantial assets to invest and wish to optimize your tax position.

• You value professional management and diversification of your investments.

• You prioritize confidentiality and wish to keep your investment activities private.

• You want a regulated and internationally recognized structure for wealth consolidation.

  
  

When to Choose an SA or SL?

• SA (Societat Anònima): Best suited for medium to large-scale businesses requiring significant capital and multiple shareholders.

• SL (Societat Limitada): Ideal for small to medium-sized businesses seeking a simple and cost-effective corporate structure.

  
  

Why Work with LinkAnd?

At LinkAnd, we specialize in helping HNWIs navigate the complexities of Andorra’s financial and corporate landscape. Whether you are looking to establish a SICAV, SA, or SL, our team provides end-to-end guidance tailored to your unique needs. From regulatory compliance to tax optimization, we ensure that you make the most of Andorra’s financial ecosystem.

Conclusion

Choosing the right financial vehicle depends on your objectives and priorities. While SICAVs offer unparalleled benefits for investment management, including tax efficiency and confidentiality, SAs and SLs are better suited for business operations. Let LinkAnd help you identify the structure that aligns with your goals and unlock the full potential of Andorra as a financial hub. Contact us today to learn more!

Note: It's important to highlight that while SICAVs in Andorra offer significant tax advantages, there are certain restrictions regarding the participation of non-residents. Specifically, the participation of a non-resident in an Andorran SICAV cannot exceed 50%, making it advantageous for interested parties to relocate their residence to Andorra to fully benefit from the tax advantages at both the corporate and personal levels.