Global Invest

Looking for a Strategic European Location? Think Andorra

Andorra offers a strategic European location and economic liberalization. Small but hungry for international business, it is a place worthy of consideration for starting or growing global business investments.
By William Bell

Andorra may not be a country name on a lot of business’ lips, but that is bound to change as it aggressively pursues foreign investors in a variety of sectors. Strategically located between Spain and France, Andorra has a strong competitive economic model that is built on a revamped foundation of economic liberalization, a competitive tax structure, and policies geared toward strengthening its global standing among international investors.

Its advantages include a stable parliamentary democracy, membership in a number of important international organizations, special agreement with the European Union, and a host of other positive qualities.

Andorra is a wealthy international commercial center and, as part of its economic modernization effort, is pursuing a broader infrastructure. Foreign investors exploring Andorra as a potential business partner can expect a welcoming hand in every direction.

Pursuing Innovation
Landlocked Andorra is located in the Pyrenees Mountains, which may seem like a deterrent to Foreign Direct Investment (FDI) at first glance. The government recognized its location in the mountains made it difficult to convince foreign commercial enterprises to startup, so in 2012 Andorra set about modernizing its legal structure and expanding the number and type of economic sectors. A law passed in 2012 opened the country to FDI and then proceeded to engage in other reforms, including establishing a competitive tax base and strengthening its infrastructure. Today, Andorra has become a prime international commercial center with an integrated banking sector and low taxes.

Andorra belongs to a number of international organizations. They include the United Nations Educational, Scientific and Cultural Organization (UNESCO); the United Nations and Organization for Security and Cooperation in Europe (OSCE); and the World Health Organization (WHO). The country is also an observer to the World Trade Organizations (WTO).

Economic diversification is the government's goal. The primary focus areas are trade, tourism, finance and property. However, Andorra wants to also establish a reputation as a place for innovation and knowledge.

It is involved in forward-thinking projects like the partnership with the Massachusetts Institute of Technology (MIT), which analyzed a large volume of data from the tourist sector. Eighty percent of Andorra's GDP comes from tourism, so it embraced the data collection and analyzation project as a way to gain the information needed to increase foreign visitors. As proof of Andorra's anxiousness to become known as an innovation magnet, MIT's Living Lab project includes various collaborative research projects in a variety of sectors, including innovation, energy and environment, tourism, dynamic urban planning, and mobility.

Ultimately, Andorra is developing major platforms for leveraging big data. There is a good infrastructure already in place and fiber-optic service available throughout Andorra.

Agreeing to Pursue Economic Success with European Union
Andorra has developed a strong financial industry. The country has a special agreement with the European Union (EU). Though not a member of the EU, it has an agreement in place called the "Agreement Between the European Economic Community and the Principality of Andorra." This agreement gives Andorra a favored nation status and establishes a customs union.

In 2011, Andorra signed a Monetary Agreement with the EU to recognize the euro as the official currency of the Principality of Andorra. The country issues euro coins and recognizes the euros and coins as legal tender. This strengthened Andorra's financial sector even more as it required the country to accept the European Union's financial protocols and regulations. Andorra has put legislation in place forbidding money laundering, terrorist financing and fraud, and it meets statistical reporting requirements.

The 2012 Law 10/2012 on Foreign Investment in the Principality of Andorra opened up most of Andorra's economic sectors to foreign investors. Other agreements were signed which support the country's efforts to become a stronger international economic player by preventing double taxation with a host of countries, including Portugal, France, Spain and Luxembourg. Per the World Bank, the top export partner countries are Spain, France, Norway, Hong Kong, China and Italy. Andorra's top import partners are Spain, France, China, Germany and Switzerland.

Clearly there is plenty of opportunity to pursue U.S. imports and exports.

Top imports include manufactured goods, machinery and transport equipment, manufactured articles, and commodities. Andorra must import a large amount of its food because agricultural production is limited by mountain terrain.

Top exports are food and live animals, beverages and tobacco, animal and vegetable oils and fats, machinery and transport equipment, and miscellaneous manufactured articles. The country has a wealth of natural resources that include hydropower, timbre, mineral water, iron ore and lead.

An area prime for foreign businesses concerns the environment. Andorra has a large agricultural sector which has led to deforestation and overgrazing of mountain meadows. These conditions have increased soil erosion. In addition, Andorra needs new technologies for wastewater treatment and solid waste disposal. There are international agreements in place to address the protection of biodiversity, ozone layer protection, and control of hazardous wastes. Protecting the environment is critical for social responsibility reasons, of course, but also to maintain a thriving tourism industry.

Ready to Diversify its Economy
Andorra is primed to diversify its economy. Foreign investments can emanate from sources that include non-Andorran individuals, an Andorran company with a foreign shareholder, foreign public entities, and permanent businesses or branches owned by foreigners. Foreign investors can own 100 percent of their Andorran company or invest in shares of companies already established. Setting up a business can be accomplished in approximately 15 days.

Andorra does not have an embassy in Washington, D.C. It has named the permanent representative to the United Nations in New York as the ambassador to the U.S. A good contact is the Andorra Chamber of Commerce, Industry and Services at, which is very active on an international basis. Another good source is the Andorran government's Ministry of Tourism and Trade.

There are so many business opportunities on the global stage today, and some continue to emerge. Andorra is a small country, but that only makes it more ready to accommodate foreign investments. It a beautiful country in a great location that is ready to expand its economy.