2021 Investment Climate Statements: Andorra

Policies Towards Foreign Direct Investment

Andorra has established an open framework for foreign investments, allowing non-residents to create companies in the country, open businesses, and invest in all kinds of assets.

The Foreign Investment Law came into force in July 2012, completely opening the economy to foreign investors. Since then, foreigners, whether resident or not, may own up to 100 percent of any Andorra-based company. The law also liberalizes restrictions on foreign professionals seeking to work in Andorra. Previously, a foreigner could only begin to practice in Andorra after twenty years of residency. Under the current regulations, any Andorran legal resident from a country that has a reciprocal standard can work in Andorra, although special working permits are required for specific professions.

The Government of Andorra created the ACTUA-Invest program ( www.actua.ad ) as Andorra’s economic development and promotion office in order to provide counseling services to both Andorran companies looking to grow and foreign investors wanting to start new businesses in Andorra. ACTUA’s mission is to increase competitiveness, innovation, and the sustainability of the economy.

ACTUA’s three key priorities are:

• Economic diversification through the development of priority industries such as blockchain, fintech, health, wellness, biotechnology, education, and sports, among others.
• Attracting direct foreign investment and supporting national companies throughout their internationalization process.
• Supporting entrepreneurs: promoting collaboration between the public and private sectors and giving support to the development of new business initiatives.

The Andorran Chamber of Commerce, Industry, and Services of Andorra ( www.ccis.ad ) is a public body that aims to promote and strengthen Andorra’s financial and business activity as well as provide services to foreign companies. The Chamber’s activities include organizing a census of commercial, industrial, and service activities; the protection of the general interests of commerce, industry, and services; promoting fair competition; and issuing certificates of origin and other commercial documents.

The Andorran Business Confederation (CEA) provides support to national companies to navigate within Andorra’s new legal, labor, and fiscal framework and facilitates companies’ international expansion projects. CEA also works to foster international investment into the country through its Iwand project, which provides information about Andorra’s economic and fiscal environment ( www.cea.ad ).

Limits on Foreign Control and Right to Private Ownership and Establishment

The Andorran legal framework has also adapted to international standards. The most relevant laws passed by Parliament to accompany the economic openness include the law of Companies (October 2007), the Law of Business Accounting (December 2007), and the Law of Foreign Investment (April 2008 and June 2012).

The OECD removed Andorra from its “tax haven list” in 2009 after the country signed the Paris Declaration, formally committing to sharing fiscal information outlined by the agreement. With the approval of the Law 19/2016, of November the 30th, on automatic exchange of information on tax matters, Andorra will exchange financial information with signatories of the “Common Reporting Standard” (CRS), developed by the G20 and approved by the OECD Council on July 2014.

From 2011 to 2019, the Parliament approved direct corporate, non-resident, capital gains, and personal income taxes. These regulations aim at establishing a transparent, modern, and internationally comparable regulatory framework. At 10 percent, well below the European average, Andorra’s corporate tax is more competitive than rates in neighboring Spain or France.

Other Investment Policy Reviews

In the past three years neither the Government nor any international organization has conducted an investment policy review, be it the Organization for Economic Cooperation and Development (OECD); World Trade Organization (WTO); or the United Nations Conference on Trade and Development (UNCTAD).

Business Facilitation

Andorra established the ACTUA program as a public/private agency, made up of several ministries, government agencies, associations, and organizations from the private sector. It aims to increase competitiveness, innovation, and sustainability. It provides counseling services, to Andorran companies and potential foreign investors to facilitate investment and economic diversification.

Andorran regulations allow for two types of commercial companies: Limited Liability Company (Societat de Responsabilitat Limitada – SL), which has a minimum capital requirement of 3,000 euros; and Joint Stock Company (Societat Anonima – SA) which is normally required for multiple shareholders and has a minimum capital requirement of 60,000 euros.

The business establishment procedures and for share acquisitions or transfers are quite similar to those of other countries, requiring the filling of a simple application form, with the additional unique condition of the presentation of any prior investment authorization received in the country. This same procedure is applicable for incorporation, establishment, extension, branching, or other form of business expansion. Once the company is registered, the foreign investment is established, and the investor is required to deposit the share capital with an Andorran banking entity and proceed to public deed of incorporation before a notary.

Outward Investment

The Government’s ACTUA programs provide grants, counseling, and online resourced to small and medium size companies to foster competitiveness and facilitate internationalization.

The Andorran Chamber of Commerce ( www.ccis.ad ) helps companies search for business opportunities abroad.

Andorra has bilateral agreements with France (2003), Spain (2003), and Portugal (2007). No bilateral investment treaty exists between Andorra and the United States.

Andorra has signed bilateral agreements for the exchange of fiscal information with 24 countries. All those agreements have been ratified and are in force.

In 2014, Andorra became the 48th signatory to the OECD  Declaration on Automatic Exchange of Information in Tax Matters , which commits countries to end bank secrecy for tax evasion purposes. Andorra signed a Non-Double Taxation agreement with France, Spain, Portugal, Luxembourg, Liechtenstein, Malta, Cyprus, and United Arab Emirates, and is currently negotiating other such agreements.

Transparency of the Regulatory System

The Government set out transparent policies and laws, which have significantly liberalized all economic sectors in Andorra. New, foreign-owned businesses have to be approved by the government, and the process can take up to a month. The Government is committed to a transparent process. Andorra has begun to relax labor and immigration standards; previously, foreign professionals had to establish 20 years of residency before being eligible to own 100 percent of their business in Andorra. This restriction has been lifted for nationals coming from countries that have reciprocal standards for Andorran citizens.

Following approval of the new Accounting Law in 2007, individuals carrying out business or professional activities, trading companies, and legal persons or entities with a profit purpose must file financial statements with the administration.

International Regulatory Considerations

Although not a member of the European Union (EU), Andorra, as a member of the European Customs Union, is subject to all EU free trade regulations and arrangements with regard to industrial products. Concerning agriculture, the EU allows duty free importation of products originating in Andorra.

Andorra is negotiating a new association agreement with the European Union that will allow Andorrans to establish themselves in Europe and Andorran companies will be able to trade in the EU market.

Although the Government took some steps in the past to become a member of the World Trade Organization (WTO); Andorra currently holds observer status in the WTO. Andorra became the 190th member of the International Monetary Fund (IMF) in October 2020.

Legal System and Judicial Independence

Andorra has a mixed legal system of civil and customary law with the influence of canon law. The judiciary is independent from the executive branch. The Supreme Court consists of a court president and eight judges, organized into civil, criminal, and administrative chambers; four magistrates make up the Constitutional Court. The Tribunal of Judges and the Tribunal of the Courts are lower courts. Regulations and enforcement actions can be appealed in the national court system.

Laws and Regulations on Foreign Direct Investment

The Law on Foreign Investment (10/2012) entered into force in 2012, opening the country’s economy by removing the sectorial restrictions stipulated in the prior legislation. In this way, Andorra has positioned itself on equal terms with neighboring economies, enabling it to become more competitive for new sectors and enterprises.

ACTUA is responsible for economic promotion and provides information on relevant laws, rules, procedures to set up a business in Andorra, as well as reporting requirements to investors. The organization also provides other services to facilitate foreign and local investments in strategic sectors.

Competition and Anti-Trust Laws

The Law on Effective Competence and Consumer Protection (13/2013) protects investors against unfair practices. The Ministry of Economy is responsible for administering anti-trust laws and reviews transactions for competition-related concerns (whether domestic or international in nature).

Expropriation and Compensation

The Law of Expropriation (1993) allows the Government to expropriate private property for public purposes in accordance with international norms, including appropriate compensation. We know of no incidents of expropriation involving the U.S. entities in Andorra.

Dispute Settlement

ICSID Convention and New York Convention

Andorra became a party to the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards in September 2015, requiring Andorran courts to enforce financial awards. Andorra is not a member of the International Center for the Settlement of Investment Disputes (ICSID).

Investor-State Dispute Settlement

Andorran legislation establishes mechanisms to resolve disputes if they arise and its judicial system is transparent. The Constitution guarantees an independent judiciary branch, overseen by a High Council of Justice. The prosecution system allows for successive appeals to higher courts. The European Court of Justice is the ultimate arbiter of unsettled appeals.

Contractual disputes between U.S. individuals or companies and Andorran entities are rare, but when they arise are handled appropriately. There have been no reported cases of U.S. investment disputes.

International Commercial Arbitration and Foreign Courts

Parties to a dispute can also resolve disputes contractually through arbitration. The Arbitration Court of the Principality of Andorra (TAPA) was established in July 2020 by the Chamber of Commerce, Industry and Services and the Andorran Bar Association in accordance with Law 16/2018. The main goal of this new organization is to mediate business disputes, both national and international, in order to reach a fair settlement for both parties without having to go to court.

Bankruptcy Regulations

Andorra’s Bankruptcy decree dates to 1969. Other laws from 2008 and 2014 complement the initial text and further protect workers’ rights to fair salaries as well set up mechanisms to monitor the implementation of judicial resolutions. Additionally, Law 8/2015 outlines urgent measures allowing Government intervention of the banking sector in a crisis.

Investment Incentives

Andorra has been known for its favorable tax regime, which investors have exploited to promote tobacco, alcohol, jewelry, cosmetics, dairy products, among others. In recent years, Andorra has reached agreements with neighboring countries to limit and regulate duty-free sales with a view towards promoting economic integration, though smuggling continues to be an issue. Andorra is a member of the European Customs Union and therefore has no tariffs on EU-manufactured goods.

ACTUA provides grants for small and medium size companies to foster competitiveness and facilitate their internationalization. The ACTUA Tech Foundation was created in 2015, in collaboration with the Media Lab of the Massachusetts Institute of Technology, with the aim of employing Andorra’s unique economy as a “living lab” to promote innovation. Andorra, thanks to its size, recent liberalizing legislation, relative affluence, and its eight million visitors per year offers ideal conditions to test this technology. ( www.actua.ad/en/innovationhubandorra ).

Foreign Trade Zones/Free Ports/Trade Facilitation

Although not a full member of the European Union (EU), Andorra, as a member of the European Customs Union, is subject to all EU free trade regulations and arrangements regarding industrial products. Moreover, the EU allows duty free importations of products acquired by visitors in Andorra in the framework of the franchises covered in the Customs Union Agreement (1990). Concerning agriculture, the EU allows duty free importation of products originating in Andorra. No free trade zones exist in the country.

Performance and Data Localization Requirements

All employees wishing to work in Andorra must have work permits, issued by annual quotas established by the Government.

Both domestic and foreign private entities have the right to establish and own business enterprises. While foreigners may now own 100 percent of a trading enterprise or a holding company, the Government must approve the establishment of any private enterprise. For a foreign resident, the process for obtaining permissions takes up to one month and is automatically approved if there are no objections. An application can be rejected if the proposal is found to threaten the environment, the public order, or the general interests of the principality. As soon as the foreign investor receives authorization to invest in the country, national laws are applicable just like any other national investor.

The Government does not follow a “forced localization” policy.

The Constitution guarantees the right to private ownership for citizens and residents. Both domestic and foreign private entities now have the right to establish and own business enterprises.

Real Property

Andorran law protects property rights with enforcement carried out at the administrative and judicial levels. Foreign investments for the purchase of property are possible in Andorra, subject to prior authorization. There is a four percent asset-transfer tax.

Secured property loans are available through the Andorran banking sector. The Andorran Financial Authority (AFA) oversees the banking sector, including mortgages.

Intellectual Property Rights

Andorra joined the World Intellectual Property Organization (WIPO) in 1994 and is party to the Paris Convention, the Berne Convention, as well as the Rome Convention since 2004. Andorra is not a member of the World Trade Organization (WTO) but holds observer status. The country’s intellectual property rights (IPR) regime is not in compliance with the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

Protection ofIPR in Andorra is weak. The legal framework includes the Trademarks Act of May 1, 1995, the Law 26/2014 on Patents of October 30.the Law on Authors’ and Neighboring Rights of June 1999, and Law 23/2011, of December 29, 2011, on the Creation of the Society of Collective Management of Copyright and Neighboring Rights.

In 2012, the Society for the Administration of Authors’ Rights (SDADV) was created to manage the economic rights, neighboring rights, and the interests of copyright holders. Right holders can choose whether to participate in this voluntary collective arrangement though in some cases, the collective arrangement system is compulsory.

Businesses seeking to register a trademark or a patent should contact the Andorran Trademarks Office and Patents Office.

Trademarks and Patents Office of the Principality of Andorra
Ministry of Economy
Edifici Administratiu del Prat del Rull
Cami de la Grau s/n
AD 500 Andorra La Vella
Tel. (376) 875 600
Email: ompa@andorra.ad
http://www.ompa.ad/ 

Andorra is not listed in the U.S. Trade Representative (USTR) Special 301 Report or included in the Notorious Markets List.

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/ 

Capital Markets and Portfolio Investment

The Andorran financial sector is efficient and is one of the main pillars of the Andorran economy, representing 20 percent of the country’s GDP and over 5 percent of the workforce.

Created in 1989, and redefined with more responsibilities in 2003, the Andorran Financial Authority (AFA; www.afa.ad ) is the supervisory and regulatory body of the Andorran financial system and the insurance sector. The AFA is a public entity with its own legal status, functionally independent from the Government. AFA has the power to carry out all necessary actions to ensure the correct development of its supervision and control functions, disciplinary and punitive powers, treasury and public debt management services, financial agency, international relations, advice, and studies.

financial system and the insurance sector. The AFA is a public entity with its own legal status, functionally independent from the Government. AFA has the power to carry out all necessary actions to ensure the correct development of its supervision and control functions, disciplinary and punitive powers, treasury and public debt management services, financial agency, international relations, advice, and studies.

The Andorran Financial Intelligence Unit (UIFAND) was created in 2000 as an independent organ to deal with the tasks of promoting and coordinating measures to combat money laundering and terror financing ( www.uifand.ad ).

The State Agency for the Resolution of Banking Institutions (AREB); is a public-legal institution created by Law 8/2015 to take urgent measures to introduce mechanisms for the recovery and resolution of banking institutions ( www.areb.ad ).

Money and Banking System

Andorra adopted the use of the Euro in 2002 and in 2011 signed a Monetary Agreement with the European Union (EU) making the Euro the official currency. Since July 1, 2013, Andorra has had the right to coin Euros.

The Andorra banking system is sound and considered the most important part of the financial sector. The Andorran banks offer a variety of services at market rates. The country also has a sizeable and growing market for portfolio investments. The country does not have a central bank.

The U.S. Internal Revenue Service has certified all the Andorran banks as qualified intermediaries.

Founded in 1960, the Association of Andorran Banks (ABA; https://www.andorranbanking.ad/ ) represents all Andorran banks. Among its tasks are representing and defending interests of its members, watching over the development and competitiveness of Andorran banking at national and international levels, improving sector technical standards, co-operation with public administrations, and promoting professional training, particularly dealing with money laundering prevention. At present, all five Andorran banking groups are ABA members, totaling an estimated 49 billion Euros in combined assets for 2019.

Foreign Exchange and Remittances

Foreign Exchange

Andorra adopted the Euro in 2002 and in 2011 signed a Monetary Agreement with the EU making the Euro the official currency. Since 2013, Andorra has the right to coin Euros.

Remittance Policies

There are no limits or restrictions on remittances provided that they correspond to a company’s official earning records.

Sovereign Wealth Funds

Andorra has no Sovereign Wealth Fund (SWF).

Andorra has thirty-five state-owned enterprises (SOEs) associated with health, social services, and energy and telecommunication, which are generally allowed to compete with private, enterprises without restriction. The only exception is the government-owned Andorra Telecom, which has enjoyed a monopoly on the telecommunications industry since 2015.

The Andorran public sector is made up of the central Administration and seven local administrations, one for each of the country’s seven parishes. The public sector employs 11.6 percent of Andorra’s workforce, or approximately 4,451 employees.

Privatization Program

Andorra has no current plans to privatize any of its SOEs.

Local enterprises follow generally accepted accounting principles, and the Government has taken some measures to promote responsible business conduct, including Law 35/2008, which establishes a protocol for acknowledging companies that excel in their human resource policies, especially regarding non-discrimination and equal opportunities for men and women.

Over the years, the Andorran banking sector has been consolidating its voluntary responsible business conduct practices, mainly through their foundations. Rather than focus on a due diligence approach to lower risks, as promoted by international guidelines such as the OECD Guidelines for Multinational Enterprises or UN Guidance on Business and Human Rights, the banking sector initiatives reaffirm their commitment to the country through ad hoc projects in a variety of areas like culture, sports, solidarity, education, and the environment. There are no reported cases of human or labor rights concerns related to responsible business conduct.

Additional Resources 

Department of State

• Country Reports on Human Rights Practices;
• Trafficking in Persons Report;
• Guidance on Implementing the “UN Guiding Principles” for Transactions Linked to Foreign Government End-Users for Products or Services with Surveillance Capabilities and;
• North Korea Sanctions & Enforcement Actions Advisory

Department of Labor

• Findings on the Worst Forms of Child Labor Report;
• List of Goods Produced by Child Labor or Forced Labor.
• Sweat & Toil: Child Labor, Forced Labor, and Human Trafficking Around the World and;
• Comply Chain.

Andorra’s laws penalize corruption, money laundering, drug trafficking, hostage taking, sale of illegal arms, prostitution, terrorism, as well as the financing of terrorism. Additional amendments were added in 2008, 2014, 2015, and 2016 to the Criminal Code and the Criminal Procedure Code that modify and introduce money laundering and terrorism financing provisions.

In 1994, Andorra joined the Council of Europe, an institution that oversees the defense of democracy, the rule of law, and human rights. That same year, the Justice Ministers of the Member States decided to fight corruption at the European level after considering that the phenomenon posed a serious threat to the stability of democratic institutions.

In early 2005, Andorra joined the Council of Europe’s Group of States against Corruption (GRECO) and, consequently, the fight against corruption. The Government has gradually built its internal regulations and relevant legal instruments and has undertaken numerous initiatives to improve the State’s response to reprehensible acts and conduct committed internally and internationally.

The Government created the Unit for the Prevention and the Fight against Corruption (UPLC) in 2008 to centralize and coordinate actions that might concern local administrations, national bodies, and entities with an international scope. UPLC is in charge of implementing the recommendations made by GRECO in the framework of periodic evaluation reports.

Andorra has not signed the UN Anticorruption Convention or the OECD Convention on Combatting Bribery of Foreign Public Officials in International Business Transactions.

There are explicitly defined rules for the ethical behavior of all participating bodies within the Andorran financial system. The Andorran Financial Authority (AFA) has also established rules regarding ethical behavior in the financial system.

The Andorran government modified and implemented new laws in order to comply with international corruption standards. The Andorran Financial Intelligence Unit (UIFAND), created in 2000 is an independent body charged with mitigating money laundering and terrorist funding ( www.uifand.ad ).

Resources to Report Corruption:

Unitat de Prevencio i Lluita contra la Corrupcio
Ministeri de Justicia i Interior
Govern d’Andorra
Ctra.de l’Obac s/n
AD700 Escaldes-Engordany
Phone: +376 875 700
Email: uplc_govern@govern.ad 

Andorra has not experienced any politically motivated damage to projects or installations, or destruction of private property. There are no nascent insurrections, belligerent neighbors, or other politically motivated activities. The likelihood of widespread civil disturbances is very low. Civil unrest is generally not a problem in Andorra. No anti-American sentiment is evident in the country.

All employees wishing to work in Andorra must have work permits, issued by annual quotas established by the Government. The tourism sector is the largest labor sector.

The Constitution recognizes workers’ rights to form trade unions to defend their economic and social interests. Alternative dispute mechanisms such as mediation and arbitration do exist. Despite these rights, union membership is relatively low.

Andorra is not a member of the International Labor Organization (ILO).

There was a total of 39,090 employed workers in Andorra in October 2020. As a result of the COVID-19 pandemic, the unemployment rate increased from 1.6 percent in February 2020 to 3 per cent in March 2020. As of June 2020, the national minimum wage was 6,25 euros (roughly USD 7.26) per hour and 1,083 euros (roughly USD 1,310) per month.

Andorra does not participate in government programs such as those offered by the U.S. International Development Finance Corporation (DFC) or the World Bank’s Multilateral Investment Guarantee Agency (MIGA).

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Data unavailable.

Table 3: Sources and Destination of FDI
Data unavailable.

Table 4: Sources of Portfolio Investment
Data unavailable. Due to foreign investment limitations up until 2012, FDI statistics are too negligible to be available through the U.S. Bureau of Economic Analysis. However, Andorra’s Investment Promotion Agency, ACTUA, has compiled available data on foreign direct investment at: http://www.actua.ad/en/foreign-direct-investment-data-andorra.

MGT/POL Officer, Steve Bremner, BremnerSA@state.gov
POL/ECON Specialist, Eulalia d’Ortado; OrtadoE@state.gov
United States Consulate General Barcelona
tel. (34) 93 280 22 27