“Andorran Multipliers”
In the face of the global financial crisis of 2007, Andorra reacted by committing to international tax harmonization, exchange of information and liberalization of foreign investment. Law 10/2012 on foreign investment represents one of the most important milestones in Andorra’s economic history and the beginning of a new stage of economic recovery and consolidation. However, despite the fact that the process of 100% liberalization in all sectors has represented a significant increase in Andorra’s PIB, the system of prior authorization as a control system has become obsolete and needed to be revised to speed up the process and at the same time offer better control guarantees.
In this regard, the European Union has developed an initiative aimed at a more effective control of foreign investments in the different member states until adopting a new regulation in October 2020, to which Andorra has wanted to join with a legislative reform of Law 10/2012 which, in essence, abolishes the system of prior authorization for residents and nationals of an important group of countries (with double taxation agreements with Andorra or reciprocal collaborators in foreign investment matters) replacing it with a much more agile and quicker system, that of declaration at the moment of the investment, which will allow the incorporation of companies almost immediately. However, the new regulation will establish a much more effective system of a posteriori control of foreign investments in order to evaluate and avoid risks to national security, public power, sovereignty, public and economic order and the environment. It is also intended to reinforce the safeguard clause with respect to critical infrastructures and technologies and all that derives from the different sensitive and strategic sectors at the national level. This control will be developed by a specialized group of technicians attached to the Ministry of Economy and, in fact, we understand that it will reinforce the controls already carried out by the compliance departments of the financial entities and also by the Immigration Service, all aimed at providing the Andorran jurisdiction with the reputation and prestige that it is striving to consolidate in a European environment where this unequivocal will to align itself unequivocally with the principles and values that govern in the international context is highly valued.
That the “foreign investment” effect has had an impact on the Andorran economy is evidence. In fact, in 2019, before the COVID-19, we reached a percentage of foreign investment over PIB of 9’8 %, which in 2020 dropped to 5’5 % for obvious reasons and that in 2021 has already represented 18′ 70%, recovering a part of what was left pending during the pandemic. At the level of foreign investment authorizations in 2021 reached the number of 1,094 compared to 611 in 2020 and the growth in investment volume is 275.2% compared to 2020.
And who makes all this possible? Undoubtedly, Andorra Business, the agency for the promotion and economic development of Andorra, as a public body, does its job. But undoubtedly, those who are doing the most to attract new investors in the country are the so-called “Multipliers”, the professionals who are dedicated to promoting the advantages of Andorra as a jurisdiction. These professionals have a great responsibility, since the reputation built around this great product called “Andorra” depends on the quality of the investors they attract. Therefore, it is necessary that they prepare themselves thoroughly and above all that those who truly have the knowledge and the vocation to do so dedicate themselves to it. On the other hand, also the foreign investor has a great responsibility and must know how to choose well his advisor, not so much for the best price of his fees -often deceitful- but for his technical and professional qualification. To be accompanied and advised by the best professionals is a guarantee of success and at the same time contributes to build the best reputation for Andorra. The new system of control by the Government of Andorra of foreign investments is an example of the degree of rigor with which it is necessary to manage an investment in Andorra and here the professionals involved will have a predominant role. Therefore, the investor will only be guaranteed the viability and success of his investment if it is in the hands of a great specialized team of professionals, the great economic ambassadors of Andorra and the most qualified “multipliers”.
The Management
Augé Legal & Fiscal
