Economical overview
Andorra has a small but thriving economy.
Tourism is the country's most important industry, and
sales of duty-free goods are also a major source of
income. In recent years Andorra has tightened its tax
legislation so that it is no longer considered a tax
haven.
Agriculture was the economic base until the mid-20th
century. Subsequently, trade in cheap, duty-free
consumer goods grew strongly. Together with good
conditions for winter sports, the duty-free trade meant
that tourism was soon to develop into the country's most
important industry.
-
Countryaah.com:
Major imports by Andorra, covering a full list of top products imported by the country and trade value for each product category.
- SONGAAH:
Find lyrics of national anthem and all songs related to the country of Andorra
Andorra also became known as an international banking
and financial center. The strict banking secrecy and the
absence of income and corporate taxes made the country a
tax haven for well-off people. In recent years,
Andorra's economy has become less protectionist. Since
November 2008, non-Andorran citizens have been allowed
to own companies in the country without the reservations
that existed previously. Before the law was changed,
foreigners had to own only one-third of a company, and
in order to own 100 percent of the shares in a company,
they had to have lived in the country for at least 20
years. This is one of several economic reforms that the
government has pushed to attract foreign capital and
wash away the country's stamp as a tax haven.
-
Abbreviationfinder.org: Check this abbreviation website to find three letter ISO codes for all countries in the world, including AND which represents the country of Andorra.
Stricter tax rules
Andorra was in 2008 one of three countries that
remained on the economic cooperation organization OECD's
black list of tax havens who did not want to cooperate
for increased transparency in the financial sector.
Andorra was removed from the list in May 2009 when the
country had begun reforming its tax legislation. New
company rules were introduced, where, for example, it
became mandatory for companies to make public annual
reports and to hire auditors.
As part of the transparency, Andorra has also had to
accept the EU savings tax directive introduced in 2005.
Since 2011, 35 percent has been deducted when EU
citizens withdraw savings from Andorran banks. 75
percent of the tax goes to the country where the bank
customer is a citizen.
The revenue for the country's budget comes largely
from import fees, excise taxes on petrol and stamps, and
bank fees, among other things. In 2011, a 10 percent
income tax was introduced for non-Andorran companies and
private individuals operating in the country.
Previously, Andorran citizens paid no income tax, but
from January 2015 they also pay a so-called flat tax of
10 percent on income and capital gains. In 2013, a VAT
of 4.5 percent was also introduced.
A special tax authority was also formed at the end of
the 2010s to ensure that the tax collection in the
country becomes more efficient so that the income can be
used in the treasury.
Disputed banking system
One problem for Andorra is that the country is so
strongly affected by the economic development of
neighboring countries, as the crisis in Spain from 2008.
For a few years Andorra's international credit rating
was written down. However, an upturn in the economy
could be noticed from 2014.
At the same time, the stability of the banking system
was questioned when US authorities in March 2015 accused
one of the country's largest banks, Banca Privada
d'Andorra (BPA), of having laundered money for foreign,
mainly Russian, criminals; three bank executives were
dismissed and the highest bank director arrested. This
was despite the fact that Andorra in 2011 committed
itself to applying EU law on financial supervision to
prevent fraud and money laundering as part of the
introduction of the euro as the official currency (see
Foreign Policy and Defense).
Andorra had previously had no currency of its own.
The euro has been used since 2002, and before that there
were both the French franc and the Spanish peseta. Since
then, the country has used the Spanish and French euro
coins, but in 2015 the Principality began to mark its
own, Andorran euro coins.
FACTS - FINANCE
GDP per person
US $ 42,030 (2018)
Total GDP
US $ 3,237 million (2018)
GDP growth
1.6 percent (2018)
Agriculture's share of GDP
0.5 percent (2017)
Manufacturing industry's share of GDP
3.1 percent (2017)
The service sector's share of GDP
79.3 percent (2017)
Currency
euro 1
- 1 euro = 100 cents
|
