1. Openness To, and Restrictions Upon, Foreign Investment
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 ( ) 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 ( ) 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 ( ).
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).
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.
The Government’s ACTUA programs provide grants, counseling, and online resourced to small and medium size companies to foster competitiveness and facilitate internationalization.
13. Foreign Direct Investment and Foreign Portfolio Investment Statistics
Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Table 3: Sources and Destination of FDI
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.