Chamber of Commerce Country Factsheet Last update: 10.01.2018
Your advisors at the Chamber of Commerce
- Violaine Mathurin+352423939481
- Thomas Bertrand+352423939337
The landlocked Principality of Andorra is one of the smallest states in Europe, nestled high in the Pyrenees Mountains between the French and Spanish borders. For 715 years, from 1278 to 1993, Andorrans lived under a unique co-principality, ruled by French and Spanish leaders (from 1607 onward, the French chief of state and the Spanish bishop of Seu d'Urgell). In 1993, this feudal system was modified, with the titular heads of state retained, but the government transformed into a parliamentary democracy. In the late 20th century, Andorra became a popular tourist destination. An estimated 10 million people visit each year drawn by the winter sports, summer climate, and duty free goods. Andorra has also become a wealthy international commercial center because of its banking facilities, low taxes, and lack of customs duties. However, recent economic hardships have required Andorra to start taxing foreign investments and to implement stricter economic policies. Andorra is not a member of the European Union, but enjoys a special relationship with it and uses the Euro as its national currency.
Source: The CIA World Factbook - Andorra
Andorra has a developed economy and a free market, with per capita income above the European average and above the level of its neighbors, Spain and France. The country has developed a sophisticated infrastructure including a one-of-a-kind micro-fiber-optic network for the entire country. Tourism, retail sales, and finance are the mainstays of Andorra's small economy, accounting for more than three-quarters of GDP. Andorra's duty-free status for some products and its summer and winter resorts attract millions of visitors annually, although the economic downturn in neighboring countries has curtailed the number of tourists. Andorra uses the euro and is effectively subject to the monetary policy of the European Central Bank. Andorra's comparative advantage as a tax haven eroded when the borders of neighboring France and Spain opened; its bank secrecy laws have been relaxed under pressure from the EU and OECD.
Agricultural production is limited - only about 5% of the land is arable - and most food has to be imported, making the economy vulnerable to changes in fuel and food prices. The principal livestock is sheep. Manufacturing output and exports consist mainly of perfumes and cosmetic products, products of the printing industry, electrical machinery and equipment, clothing, tobacco products, and furniture. Andorra is a member of the EU Customs Union and is treated as an EU member for trade in manufactured goods (no tariffs) and as a non-EU member for agricultural products.
Andorra is open to, and actively seeking to attract, foreign investment. The Andorran economy is undergoing a process of diversification centered largely on the sectors of tourism, trade, property, and finance. To provide incentives for growth and diversification in the economy, the Andorran government began sweeping economic reforms in 2006. The Parliament approved three laws to complement the first phase of economic openness: on Companies (October 2007), on Business Accounting (December 2007), and on Foreign Investment (April 2008 and June 2012). From 2011 to 2015, the Parliament also approved direct taxes in the form taxes on corporations, on individual incomes of residents and non-residents, and on capital gains, savings, and economic activities. These regulations aim to establish a transparent, modern, and internationally comparable regulatory framework.
The principal objectives of the economic reform are to attract investment and businesses which can contribute most to Andorra’s economic development, offering greater diversification and contributing higher added value. Prior to 2008, when the first law on investment was approved, Andorra offered limited foreign investment opportunities largely due to concerns about the impact of foreign firms on such a small economy. As a consequence, non-citizens were allowed to own no more than 33% of a company. Only after residing in the country for a minimum of 20 years were foreigners entitled to own 100%.
Luxembourg and the country
Existing conventions and agreements
Non double taxation agreement
In order to promote international economic and financial relations in the interest of the Grand Duchy of Luxembourg, the Luxembourg government negotiates bilateral agreements for the avoidance of double taxation and prevent fiscal evasion with respect to Taxes on Income and on fortune with third countries.
Convention from 2.6.14 (Memorial 2015, A, p. 5039)
Effective as of 1.1.2017
Air Services agreement
The Statec Foreign Trade statistics provide information on the trade of goods - by product and by country. This information is collected respectively through the INTRASTAT declaration and on the basis of customs documents.
You can see the statistics on the website of the Statec.
Contact point in Andorra
Embassy of the Grand Duchy of Luxembourg in Andorra
Ambassador with residence in Madrid: Mr. Jean GRAFF
Tel : +34 91 4 35 91 64 / +34 91 4 35 92 26 / +34 91 4 35 93 18
Fax : +34 91 5 77 48 26
E-mail : madrid.amb(at)mae.etat.lu
Honorary Consul with jurisdiction in the Principality of Andorra:
Mr. Gilles SERRA
Urb. Ermengol Serra 015, 2D
Tel: +376 33 21 99
Country risk as defined by Office du Ducroire for Andorra
Ducroire is the only credit insurer covering open account deals in over 200 countries. A rating on a scale from 1 to 7 shows the intensity of the political risk. Category 1 comprises countries with the lowest political risk and category 7 countries with the highest. Macroeconomics experts also assess the repayment climate for all buyers in a country.
- CIA the World Fact Book
- Das it Andorra
- Présentation d'Andorre par France Diplomatie
- Doing Business in Andorra - Embassy of the US Madrid
The Chamber of Commerce and the country