Mundo´s country rating is essentially a freedom index whereby our teams of specialists rate a combination of freedoms which include freedom from violence and personal attacks, financial freedom from high taxes, business freedom from government interference, and especially from socialism and communism.

Political Stability

Andorra is perhaps one of the most politically stable countries in the world. Since 2011 the government has been led by the Democrats for Andorra party, which has won election after election without major inconvenience. Moreover, this small co-principality is governed at the state level by the President of France and the Bishop of Urgel. However, most of the decisions involving the development of national policies and decisions are made by the General Council of Andorra, in which the main political forces of the country converge. This leads to a more balanced development of political power under the rules of democracy.

Likewise, other factors that make Andorra a stable political system are the free and transparent management of the economy. Especially since the banking reforms (for example, the elimination of banking secrecy) that have been implemented since the financial crisis of 2011 and the existence of low tax rates. This translates into Andorra being ranked 32nd among the countries with the highest HDI in the world in 2020, according to the United Nations Development Programme (UNDP). 

Thus, Andorra has a government that works to ensure the welfare and security of its citizens and businesses. Making the country a fertile place free of political uncertainty.

Personal Security

The micro-state is characterized by a long history of peace and neutrality. One of the main factors is its geographical condition (it is a territory of 468 square kilometers) which gives it the privilege of being an easy territory to protect and control the police. In addition, its external security is guaranteed by agreements with its neighboring countries, France and Spain. Being such a small country, it does not require the existence of a conventional army. 

On other hand, the low demographic density and the coexistence of people coming from different parts of Europe and the world as a result of the tourist activity, make Andorra a tolerant and safe country for anyone who wishes to visit or live in it. To make proof of this, according to the world atlas of Knoema data, between 2004 and 2015, in Andorra there were only 3 homicides. 

This means a favorable condition, for example, for those people who have invested for years in security systems to protect their property or even their life. If the choice is to invest in Andorra or to make a retirement place the small co-principality, you will be making the right decision to get rid of worries.

Tax System

Andorra has one of the most cost-effective and clearly defined tax systems in Europe. This benefits both families and companies. First of all, there is the personal income tax. Natural persons are included in it. It is only 10% of the annual declared resources. This makes it one of the lowest in Europe, if we compare it with countries such as the United Kingdom or Germany where it is over 40%. This applies only if the income exceeds 40,000 euros. In the same way, taxes on companies or business activities have the same percentage and it is applicable as long as the income is less than 100,000 euros. 

This has a lesser impact on profits and surpluses generated during the annual period. It should be noted that the declaration is made only once a year.

As a consequence, VAT is possibly one of the lowest in Europe, representing only 4.5%. This indirect tax is divided into different rates depending on the service or product being accessed. For example, there is a 0% rate for medical or educational services. Or the reduced rate, which is 1% and applies to human consumption products. This means a lower cost in the purchase of products or payment of services and evidently a smaller hit in the pocket of consumers and clients.

Finally, while in many countries of the world it is discussed whether it is correct or not to apply taxes to great wealth or inheritances, in Andorra they do not hesitate to be categorical in not putting the hands of the State on the resources of those who mean a potential investor. This is perhaps one of the major attractions of the country within its tax system and is what makes it a preference for those who wish to reside there fiscally. 

Thus, Andorra has a very attractive fiscal or tax system. Very low tax collection rates have not been, and are not expected to be, altered for quite some time.

Investment Potential

The country operates around three sectors with great potential: tourism, commerce and finance. 

Andorra is visited annually by 9 million foreigners who come to shop, visit its landscapes and attend international events. This makes it rich in opportunities to offer services to a large flow of people eager to be well served. 

Banking represents 20% of the GDP. Since 2011, as a result of the financial crisis, it has been carrying out reforms to ensure international standards of transparency and thus offer much more stable and measured services in the management of domestic and foreign capital.

The country has double taxation treaties with countries such as France, Spain, Luxembourg and the United Arab Emirates. This offers the benefit that taxes will only be levied once a year and the obtaining of much juicier profits. 

On the other hand, the forthcoming negotiation of an agreement with the European Union allows access to a much wider and freer market that revolves around energy, technology or communications. 

Andorra is ready to be part of the future. Its political, social and economic stability guarantees a safe environment for anyone who wishes to invest and make this small land great.

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