Andorra is the smallest country located in the Pyrenees, between Spain and France. With an extension of 468Km2, a total of approximately 77,000 people reside , with very diverse nationalities, being most well-known those of the neighboring countries. The official language is Catalan, although due to be due to the significant influence of frequent tourism, Spanish and France are also spoken among others.
The principality is divided into seven parishes, where Andorra La Vella is its capital. Andorra La Vella, Escaldes-Engordany and Sant Julià de Lòria border Spain. Canillo and Ordino are bordered by France, and Encamp and La Massana face the two countries.
Although Andorra does not belong to the European Union, since 1990 it has been considered part of it in economic activities and, later, in currency. Due to this consideration, commercial activity is exempt from foreign taxes.
The double taxation agreements signed by Andorra with various countries such as France, Spain, Luxembourg, Liechtenstein, Portugal, the United Arab Emirates and Malta are also very important.
Negotiations are currently underway to reach an agreement with the EU that will give access to the European internal market, with more than 500 million consumers.
In the field of movement of people, Andorra maintains its customs controls, as it is not part of the Schengen area, although no visa is required and applies entry requirements similar to the rest of the territories of the Union already which for entry into the country must be made by any of the territories annexed to the Schengen treaty.
Those visitors (non-EU) who wish to travel to Andorra will have to apply for a multiple entry and exit visa, because for this purpose entering the country means leaving the European Union.
It is no news that Andorra is a tourist country. Its ski resorts, as well as its commercial core and its thermal waters make the principality a perfect place to unwind.
Another strategic sector for the country is the financial sector, and its core is the banking system. Its contribution to GDP is very significant, standing at approximately 20%. Its excellent solvency and liquidity ratios guarantee the good evolution of this sector in Andorra, as well as its consolidation in both the internal and external market.
In relation to Andorran GDP, another interesting fact is its low indebtedness, standing at around 40% in 2019.
We must not forget that in the tax field it also enjoys many advantages. The General Indirect Tax (VAT in Spain or VAT in France) is found in a percentage of 4.5%, or 1% in basic necessities, health, education, culture and rent. It is also very attractive in the corporate field, as these tax a maximum of 10% on profits, and in the field of personal income tax the maximum application is also 10% and begins its taxation from 24,000 € per year.
The new Foreign Investment Act, which entered into force in 2012, as well as recent agreements with EU states on taxation, ratify the Principality’s continued progress towards the establishment of a European area of ample opportunities for to investment and economic expansion. Since October 2020, Andorra has also been part of the International Monetary Fund.
What makes Andorra very attractive in the tax field? Yes, it is. But it’s not the only reason many travelers decide to stay and live there.
Andorra has a quality of life that makes it the ideal place to live. Its natural environment provides Andorra with excellent air quality 90% of the time, thanks to its enclave between mountains. Thanks to this, and other factors, Andorra is at the forefront of life expectancy worldwide, with an average of 84.5 years and a quarter in the report of the prestigious medical journal The Lancet.
In terms of public safety, Andorra has extremely low, almost non-existent crime rates, making it one of the safest countries in the world. Its low crime rate places Andorra in the top 5 safest countries in the world to live in and for its visitors. To get an idea, if we compare Andorra with its neighboring countries we see Spain in 32nd place and France in 60th place in the
Global Peace Index.
The health system in Andorra is the CASS (Andorran Social Security Fund). Located at the top of the global ranking of health systems, it works with a system of copayments.
75% of the cost of medical visits is covered by the government. When it comes to admission or surgery these are 90% covered.
For those who decide to move to Andorra as a family, comment on the magnificent educational system it has. Andorra offers three options public education systems, Spanish, Andorran and French. There are also private options that offer bilingual solutions (English). Education is compulsory from 6 to 16 years.
Andorra has a Mediterranean climate with typical characteristics of mountainous areas. Winter temperatures are low, averaging -2oC and with heavy snowfall. Summer brings temperate temperatures to Andorra and a dry climate, with an average of 24ͦC, depending also on the area of the country where we are.
Transport and communication
Andorra communicates with the territories of Spain and France by road, these are the only points of entry into the territory of Andorra. Its location between these territories allows residents of Andorra to have at their disposal two airports with important international flights, in Spain El Prat airport and in France Blagnac airport in Toulouse.
Andorra is becoming one of the countries in Europe with the highest Internet connectivity, in fact, 94.5% of Andorran households already have access to the Internet. Procedures with the Administration are being encouraged a lot in the country by electronic means, and 40.4% of the population has already done some of them. Online shopping is also the order of the day, with 53% of the population admitting to having ever made one. At the European level:
2nd country in Europe where the mobile phone has been used the most to connect to the Internet (92.6%)
3rd country in Europe in percentage of people who connect to the Internet daily (95.8%)
7th country in Europe in proportion of households with Internet access (94.5%)
10th country in Europe in proportion where more people have connected to the Internet in the last three months (91.6%)