Andorra is the last independent survivor of the Marca Hispanica created by Charlemagne to keep the Islamic Moors from advancing to Christian France. Andorra’s borders have remained unchanged since 1278 and has survived as an independent state through many periods of great geo political challenges inc the Napoleonic, WWI, WWII, Spainish civil war, Franco’s rule of Spain, etc. Andorra has been annexed by both France and Spain at various points in including to the Crown of Aragon twice, in 1396 and 1512. France occupied Andorra between 1933 until 1940.
Andorra formally became a parliamentary democracy in May 1993 following approval of a new constitution by a popular referendum in March 1993. The new constitution retained the French and Spanish co-princes although with reduced, and narrowly defined powers. Civil rights were greatly expanded including the legalization of political parties and trade unions, and provision was made for an independent judiciary. Andorra entered into a customs union with the European Community (now the EU) in 1991 and was admitted to the UN on 28 July 1993.
Andorra operates a “small state” system. Many of the social welfare institutions that you would expect to find in a European state exist in Andorra but welfare benefits are small in comparisson to European neighbours. This policy has encouraged a large private sector to operate. Unemployment and poverty are almost non existant in Andorra. Education is free. This business friendly environment has encouraged the private sector to sustain her gross national product from tourism, banking and other service lead businesses.
More recently, the country has been seeking ways to improve its export potential to increase the size of her economy. New legislation planned in 2012 will open the way for foreign nationals to own enterprises in Andorra for the first time in her history. This is to encourage more inward investment into the principality.
Andorra is offers a highly tax efficient, low regulatory base for business as well as high net worth individuals is the message.
The state has become renowned as a mountain alternative to Monaco in recent years as its offers zero income tax and capital gains tax residency programs to international high net worth individuals. The financial services sector of the economy is highly important, given Andorra’s status as a tax haven. It has recently doubled the number of visas for high net worth individuals to gain residency in the country.