General Overview. Andorra is not a classical offshore jurisdiction, as it does not offer some of the products one expects from an offshore country. Thus, for example, it is not likely that one establishes an offshore trust there; in addition a particular tax regime for financial institutions, such as banks, funds and insurance companies, is not offered. However, Andorra is an attractive jurisdiction from a taxation point of view, as individuals and corporate entities are liable to pay income tax at a rate of 0%.

Andorra is now trying to implement a number of economic reforms, in order to attract foreign investors to the jurisdiction.  In the past, the government of Andorra insisted on Andorran majority ownership in every enterprise, which is now being significantly liberalized, and international owners may hold 100% of shares in offshore companies of 200 different market segments. It is a significant innovation, as previously a non-Andorran business owner could hold only up to 33% of a company shares. The government may provide its support to international investors, involved in socially responsible projects and those market segments, which the government intends to develop.

Banking Sector. Even though Andorran government has recently allowed foreign corporations to control financial institutions, including banks, it does not mean that Andorra wishes to develop foreign ownership of financial institutions. Banks of Andorra are linked to Spain, but they are independent entities with conservative policy and stability. Banks of Andorra are widely known for absence of taxes, as well as secrecy laws. Numbered accounts are available to selected clients. These aspects in combination with Andorra’s geographical location make the jurisdiction attractive for European investors wishing to choose a good offshore bank as their banking partner.

Holding Company. Andorra can be characterized by the absence of double taxation treaties with other countries, which does not make the jurisdiction attractive for international trading activities, however, it may be a favourable place for collecting business proceeds. Absence of taxes combined with a correctly created business structure with companies in high-standing jurisdictions, make Andorra and attractive jurisdiction for creating holding companies in a tax-effective environment.