A few days ago, I was reviewing the promotional material we had in our archives and, to my great surprise, I found a copy of an old document titled at the time “Invest With Andorra” (IWAND). Naturally, I couldn’t help but flip through it while reminiscing about all that it had represented for the Andorran Business Confederation during a particularly delicate moment for the country’s economy. This document was created in 2012, just after the adoption of the new Foreign Investment Law, with the aim of introducing the world to the new Andorran economic and fiscal model, at a time when our GDP had reached a low level and when we had no choice but to bet on economic diversification, given the saturation of traditional sectors that had brought us prosperity until the early 2000s. The document summarized the main virtues of the differential international standardization process, positioning us as a jurisdiction competitive enough to arouse the interest of foreign investors.
I remember as if it were yesterday the press conference in late November 2012 where IWAND was presented and the first of many conferences organized to present its content, on a cold morning of December 3, 2012, at Foment del Treball in Barcelona. Other conferences followed, both with our neighbors, Spain and France, and in other countries of Central and Eastern Europe, in China, and the Middle East, all with the aim of giving international visibility to Andorra and thus being able to explain and educate about the significant changes driven by our country that we wanted to use to give new momentum to our economy with the arrival of foreign investments.
Who would have said at the time that 12 years later, we would be “defending” ourselves from the “speculative external invasion” and its most harmful effects, especially after seeing how difficult it was to be heard and valued as a real, attractive, and safe jurisdiction to invest in. Indeed, the first years were not good, as the model was incomplete, and it lacked agreements to avoid double taxation.
The agreement with Spain came first, but that with France took time until Andorra adopted the Personal Income Tax Law and thus generalized direct taxation from 2015.
Returning to IWAND, more than one would have wondered why “WITH” and not “IN”, as was the custom in other jurisdictions seeking to attract foreign investment. To answer this question, we have to place ourselves in the time we were in, between the OECD’s black and gray lists after a financial crisis in 2007 and a global economic downturn. We decided to put an end once and for all to the opacity of certain territories, like ours. We had always been an extremely conservative and restrictive country regarding foreign investment, and only necessity had pushed us to open up to it.
Moreover, since 2009, we were “pressured” from all sides, aware that we had to transform and bet on standardization or remain on the sidelines of the new international context. Of course, with such an emphasis on transparency, there came a time when we felt maybe so exposed that out of modesty, at least in this first stage, we considered the use of “IN” a bit aggressive. Maybe everyone we were negotiating with would get even angrier.
At that time, the CEA thought it over and time proved that it was the right decision, that we could not just sit back and that we had to be brave, without going to the extreme. And that’s how we realized it was much more positive for the country that the international companies we desired to see emerge did so hand in hand and under the tutelage of Andorra and its people. It was about sharing, collaborating, opening our arms to new international partners, and developing new initiatives together, not just attracting fraudsters or tax evaders. We felt much more comfortable with “WITH” and that’s how it remained. Today, we realize that if we had promoted “WITH” more than “IN”, the excesses that now force us to react to uncontrolled foreign investment probably would not have occurred.
Despite our initial caution, times of euphoria and disinhibition arrived, particularly with the signing of conventions to avoid double taxation with Spain, France, and Portugal, and especially, the agreement with the EU for the automatic exchange of tax information, which allowed us to get off any list that was not white, and our government boasted of its INVEST IN ANDORRA coinciding with the consolidation of economic opening and the arrival of foreign investments reaching levels close to 20% of GDP.
We have already mentioned in previous articles that the process of economic diversification has failed and that we need deep reflection on this.
The answer, I indicated in my last article, where I precisely advocated for a new process of real and effective economic diversification, and where the Association Agreement with the European Union opened new perspectives of possibilities and prosperity for us. I don’t want to repeat everything I wrote in my last articles, where the EU played a leading role, and I just want to emphasize here that we should not be afraid of what comes from Europe, on the contrary, learning from the mistakes of the past, when we go to Brussels to promote our country, let’s do it with that spirit of collaboration from 2012, open to welcoming and learning from those who come from outside and to share the space to do bigger things than we would do alone and separately, having an attitude of “WITH” and not “IN”, and taking advantage of everything that the European Single Market offers us, if we finally choose to be part of it, of course.
Therefore, I claim the spirit of Invest With Andorra, kept in a drawer of the CEA, but which has remained ajar waiting for us to save its essence one day and use it, why not, to face the new link with Europe in a cooperative, open, proactive, and empathetic manner.
As I write this article, we have just learned that the government’s negotiations with the EU have concluded and will soon be signed, followed by the ratification process by the General Council and the subsequent referendum. I don’t know what you will vote, but if I have the chance to vote, I will vote “WITH”.
By Pere Augé, CEO and Founding Partner of Augé Holding Group
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