Economy and Banking Sector of Andorra

The Principality of Andorra is a European micro-state located in the Central Pyrenees between Spain and France, members of the European Union.

Andorra’s economic model to date has been mainly based on tourism (skiing and commerce), the financial sector and, to a lesser extent, construction and real estate in recent years.

The Andorran banking sector comprises a total of five banking groups and has more than 80 years’ experience in this activity. The banking entities in Andorra render banking services (retail and private banking), asset management, brokering and insurance services.

Location Southwestern Europe
Population (2013)76 098 ↓ (0.00%)
EU Status not a member
Economy
National Currency EUR (Euro)
GDP 
    Nominal GDP (2013)2.4 bln EUR ↓ (0.00%)
Inflation Rate 
    CPI, Year Average (2013)0.0 % ↓ (2012: 1.1 %)
Credit Ratings (as of Sep 2016)
    FitchBBB good credit quality, outlook stable
    Moody's-
    S&PBBB- lower medium grade
Taxation
Withholding Tax 0.0 - 10.0%
Information Exchange 
    Exchange on Request 22 signed agreements
    Automatic Exchange starts in September 2018
FATCA no IGA
Banking Sector
Deposit Guarantee Scheme 
    Maximum Protected Amount 100 000 EUR
Country Ceiling for Deposits 
    Local Currency (Euro)A3 upper medium grade
    Foreign CurrencyA3 upper medium grade
Banking Sector Structure 
    Number of Banks6
    Recent Changes (2015) new banks: 1, closed banks: 1
    Consolidated Assets (2014) 14 046.56 mln EUR ↓ (-11.49%)
Major Banks
 Andorra Banc Agrícol Reig, SA (Andbank)  Mora Banc Grup, SA
 Credit Andorra Group  Banc Sabadell d’Andorra, SA
 List of Banks in Andorra

Andorran Economy

GDP

According to Department of Statistics (Andorra), nominal GDP of Andorra in 2013 was 2.4 bln EUR.

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Inflation Rate

According to Department of Statistics (Andorra), inflation rate in Andorra in 2013 expressed as annual percentages of average consumer prices was 0.0% which was below the Euro Area average (1.4%) and below the European Union average (1.5%).

Inflation Rate in Andorra.
Chart 1. Inflation Rate in Andorra. Source: Department of Statistics (Andorra).
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Taxation in Andorra

Withholding Tax

Withholding taxes are imposed at source of income and are often applied to dividends, interest, royalties, rent and similar payments. The rates of withholding tax are often reduced by double taxation agreements.

Withholding tax rates applied on payments of interest and dividends in Andorra are shown in Table 1.

Dividends Interest
Natural person, resident 0.00.0
Natural person, non-resident 10.010.0
Table 1. Withholding tax rates in Andorra.
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Information Exchange

There are 3 ways for jusrisdictions to exchange information on tax matters:

  • spontaneously;
  • on request;
  • automatically.

Tax Information Exchange Agreements (TIEAs) enable exchange of information on request relating to a specific tax investigation, either criminal or civil.

Andorra signed TIEAs which already came info force with the following jurisdictions (for agreements which came into force after 01 January 2013 the date of coming into force is given in brackets):

 Argentina
 Australia
 Austria
 Czech Republic (Jun 2014)
 Denmark
 Faroe Islands
 Finland
 France
 Germany
 Greenland (Apr 2013)
 Iceland
 Liechtenstein
 Monaco
 Netherlands
 Norway
 Poland (Dec 2013)
 Portugal
 San Marino
 Spain
 Sweden

There are also several agreements between Andorra and other jurisdictions which was signed but haven't yet come into force (for agreements signed after 01 January 2013 of signing the agreement is given in brackets):

 Belgium
 Switzerland (Mar 2014)

Automatic information exchange allows jurisdictions to exchange information automatically, without having a specific tax investigation.

Andorra didn't sign the automatic information exchange agreement but made a commitment to start the automatic information exchange in September 2018.

Further Information:
Automatic Exchange of Information on Financial Accounts
Countries Which Will Not Automatically Exchange Account Information

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FATCA

Foreign Account Tax Compliance Act (FATCA) which became law in the United States in March 2010, focuses on reporting made by foreign financial institutions about financial accounts held by US taxpayers or foreign entities in which US taxpayers hold a substantial ownership interest. The FATCA-reporting is facilitated by Intergovernmental Agreements (IGAs).

Although there is no IGA between Andorra and the United States, banking and financial entities operating in Andorra have reached the agreement with the IRS to participate in FATCA on an individual basis.

Further Information:
FATCA and European countries

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Andorran Banking Sector

Deposit Guarantee Scheme

Deposit Guarantee Schemes compensate certain deposits held by depositors of a bank that becomes unable to meet its obligations.

From a depositor's point of view it is important to know:

  • if the depositor is eligible within the terms of the deposit guarantee scheme;
  • if the depositor's bank is a participant in the deposit guarantee scheme;
  • if the depositor's type of deposit is covered by the deposit guarantee scheme.

All these details about deposit guarantee scheme in Andorra are summarised in Table 2.

Scheme Participantsall credit institutions operating in Andorra, branches of Andorran banks abroad
Eligible Depositorsnatural persons, legal entities
Covered Accountscash demand deposits, term deposits, deposit certicifates and other similar debt securities
Covered Currenciesall
Maximum Protected Amount100 000 EUR
Paid In CurrencyEUR

Table 2. Deposit guarantee scheme in Andorra.

Further Information:
Deposit Guarantee Schemes in Europe

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Country Ceiling for Deposits

Moody's country ceilings for deposits specify the highest rating that can be assigned to local- or foreign- currency denominated deposit obligations of a bank or other deposit taking institution domiciled within that country.

Local currency (Euro) deposit ceiling for Andorra is set to A3 (upper medium grade), foreign currency deposit ceiling is A3 (upper medium grade).

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Banking Sector Structure

Currently there are 6 credit institutions operating in Andorra.

Recent structural changes (2013 - 2015) of the banking sector of Andorra are summarised in Table 3.

201320142015
Number of Opened Banks001
Number of Closed Banks001

Table 3. Recent structural changes in the banking sector of Andorra.

The list of the most recently opened banks in Andorra is provided in Table 4.

NameStart Date
 Vall Banc, SAU (new)June 2015

Table 4. The most recently opened banks in Andorra.

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