Andorra
Economy

Tourism, the mainstay of Andorra's economy, accounts for roughly 80% of GDP. An estimated 10.2 million tourists visit annually, attracted by Andorra's duty-free status and by its summer and winter resorts.

One of the main sources of income in Andorra is tourism from ski resorts which total over 175 km (109 mi) of ski grounds. The sport brings in over 7 million visitors annually and an estimated 340 million euros per year, sustaining 2,000 direct and 10,000 indirect jobs at present since 2007.

The banking sector, with its tax haven status, also contributes substantially to the economy with revenues raised exclusively through import tariffs (the financial and insurance sector accounts for approximately 19% of GDP). However, during the European sovereign-debt crisis of the 21st century, the tourist industry suffered a decline, partly caused by a drop in the prices of goods in Spain, undercutting duty-free shopping and increasing unemployment. On 1 January 2012, a business tax of 10% was introduced, followed by a sales tax of 2% a year later, which raised just over 14 million euros in its first quarter.

Agricultural production is limited; only 1.7% of the land is arable, and most food has to be imported. Some tobacco is grown locally. The principal livestock activity is domestic sheep raising. Manufacturing output consists mainly of cigarettes, cigars, and furniture. Andorra's natural resources include hydroelectric power, mineral water, timber, iron ore, and lead.

Andorra is not a member of the European Union, but enjoys a special relationship with it, such as being treated as an EU member for trade in manufactured goods (no tariffs) and as a non-EU member for agricultural products. Andorra lacked a currency of its own and used both the French franc and the Spanish peseta in banking transactions until 31 December 1999, when both currencies were replaced by the EU's single currency, the euro. Coins and notes of both the franc and the peseta remained legal tender in Andorra until 31 December 2002. Andorra negotiated to issue its own euro coins, beginning in 2014.

Andorra has historically had one of the world's lowest unemployment rates. In 2019 it stood at 2%.

On 31 May 2013, it was announced that Andorra intended to legislate for the introduction of an income tax by the end of June, against a background of increasing dissatisfaction with the existence of tax havens among EU members. The announcement was made following a meeting in Paris between the Prime Minister Antoni Martí and the French President and Prince of Andorra François Hollande. Hollande welcomed the move as part of a process of Andorra "bringing its taxation in line with international standards".

By the mid-2010s, the financial system comprised five banking groups, one specialised credit entity, eight investment undertaking management entities, three asset management companies, and 29 insurance companies, 14 of which are branches of foreign insurance companies authorised to operate in the principality. The last mergers between banks took place in 2022, bringing the Andorran financial sector to currently have 3 active banking groups.
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