2009 Investment Climate Statement - Andorra

2009 Investment Climate Statement
Bureau of Economic, Energy and Business Affairs
February 2009

Openness to Foreign Investment

In April 2008, the Andorran government approved an investment law, which should increase foreign investment opportunities in the country. This new law allows foreign investors to own 100% of a company in sectors such as technology, industrial production, research and development, electronic commerce, audiovisual production, medicine and aesthetic medicine, university education and professional training. In other sectors foreigners will be able to own 49% of the share of a company. Prior to November, Andorra had limited foreign investment and non-citizens were allowed to own only 33 percent of a company. Only if they had resided in the country for 20 years were they entitled to own 100 percent of a company.

By reforming legislation, the Andorra government intends to diversify an economy over dependent on tourism, draw foreign capital to new sectors, as well as bring Andorran laws closer to European standards.

Conversion and Transfer Policies

The currency of Andorra is the Euro. There are no limits or restrictions provided that they correspond to a company’s official earnings records.

Expropriation and Compensation

Private investors are entitled to compensation by law. As far as can be determined, no incidents of expropriation involving the U.S. have occurred in Andorra.

Dispute Settlement

Disputes settlements are resolved through courts in accordance with established laws.

Performance requirements and incentives

Andorra’s regulations are strict in terms of controlling business ownership.

The aforementioned legislation calls for direct taxation of 100 % foreign-owned companies. Bills also call for a 15% tax on profits. Taxes may be offset by expenditures on R&D, staff training, and environmental protection. Laws also provide tax relief of €10,000 per year for the employment of disabled individuals. Proposed laws require an investigation into the background of the partners founding the company to verify their professional integrity. Individuals with criminal records in any country, or who have been fired from a public position or who have been prosecuted for money laundering, tax evasion, misappropriation of public funds and property crimes will be disqualified from owning a company in Andorra.

Right to Private Ownership and Establishment

Property rights are protected under article 27 of the Constitution. As mentioned above, laws restricting foreign ownership of domestic enterprises have been changed to allow greater foreign investment.

Protection of Property Rights

Andorra has been a member of the World International Property Organization (WIPO) since 1994. Protection of intellectual property rights, however, is weak.

Transparency of the Regulatory System

The government has set out transparent policies and effective laws.

Efficient Capital Markets and Portfolio Investment

Andorra adopted the Euro in 2001. Because the country does not have a currency of its own, there are no exchange or capital controls. The financial sector is modern and efficient.

The Andorran administration has no formal investment incentive schemes but may occasionally offer support for the development of tourist facilities.

Political Violence

Andorra has not experienced any politically motivated destruction of property. No anti-American sentiment is evident in the country.


Legal and financial systems are highly transparent. The Andorran revised Penal Code that came into effect in September 2005 increases penalties for corruption and money laundering.

Bilateral Investment Agreements

Andorra has concluded bilateral agreements with France (2003), Spain (2003), and Portugal (2006). No agreements exist between Andorra and the U. S.

OPIC and other Investment Insurance Programs

Andorra is not a member of OPIC.


Unemployment is non-existent in Andorra; rather, there is a shortage of workers. All employees wanting to work in Andorra need work permits. Annual quotas are established for new issues of renewable work permits. Tourism is the sector with the greatest need for workers.

Foreign Trade Zones/Free Ports

Although not a full member of the European Union (EU), Andorra is subject to all EU free trade zone regulations and arrangements with regard to industrial products. Concerning agriculture, the EU allows duty free importation of products originating in Andorra. No Free Trade zones exist in the country.

Foreign Direct Investment Statistics

Due to foreign investment limitations no such statistics have existed in Andorra. The situation may change with the new investment law.

Andorra is, along with Monaco and Liechtenstein, classified as one of the three global “uncooperative tax havens” by the Organization for Economic Cooperation and Development (OECD).

On July 1, 2005, and in line with directives outlined by ECOFIN (Economic and Financial Committee of the European Union), Andorran banks began taxing the yields of non-citizen’s savings account. This was yet another step the Andorran government took to get the country’s name off the OECD list of tax havens, but it has not been enough for OECD. Andorra remains on the list.

Andorra maintains its bank secrecy practice.