Andorra: Country and Foreign Investment
The business environment in Andorra is quite liberal. Until 2011 there were no corporate income taxes, but there are moderate annual fees and charges (see Types of Company, Domestic Corporate Taxation and Offshore Legal and Tax Regimes). Regulation is light. There are no exchange or capital controls. Telecommunications are good, and Internet hosting is available.
Although there is some industrial and commercial activity, particularly around the tourist trade, the best-developed sector is banking, especially private banking, taking advantage of Andorra's strict banking secrecy rules. Other financial services are not particularly sophisticated, although the Government has encouraged the insurance sector.
In June, 2004, however, Andorra was obliged to accept the EU's Savings Tax Directive, and from July, 2005, imposed a withholding tax of 15% (20% from July 1, 2008 and 35% from 2011) on returns on savings paid to citizens of Member States of the EU, of which 75% is remitted onwards to the States concerned.