The government of Andorra has set in motion plans to capitalise on the mounting wave of YouTubers and influencers that have moved to the country, and turn the microstate into a hotspot for esports and the digital economy. 

“We are the first country in the world with a strategic plan on esports,” economy minister Jordi Gallardo tells fDi. “This gives us a window and opportunity to be different from other countries [in this sector].”

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A picturesque country of 80,000 people squeezed between Spain and France, Andorra has come a long way in cleaning up its reputation as a scandal-prone offshore fiscal haven. The OECD removed the country from its list of uncooperative tax havens in 2009, before the country dropped its banking secrecy in 2017, prompting the EU to remove it from its blacklist of fiscal havens. 

Attractive proposition

Against this backdrop of increased transparency and compliance with OECD standards, the country has continued to pull the fiscal level to boost competitiveness. Personal income tax remains between 0% and 10%, compared to 49% in Spain or 45% in France and Germany. The country has no wealth tax and indirect taxes are also relatively low with value-added tax standing at 4.5%, versus 21% in Spain, 20% in France and 19% in Germany. 

Its fiscal set-up, combined with high quality of life and good access to internet infrastructure, has proved an increasingly attractive proposition for YouTubers and influencers struggling with the perks and perils of notoriety and high income levels in neighbouring Spain. Of the top 15 YouTubers in Spain, eight have moved their residence to Andorra, according to consultancy Andorra Partners. 

With most of them active in online gaming, and esports in general, the government has come up with a national strategy to make Andorra a reference point in the fast-growing esports industry. 

“Esports is not only competition. Our plan has five other dimensions including business, infrastructure, tourism, technology and education too,” Mr Gallardo says, pointing to the fact that esports will become part of the national education curriculum. 

Bigger picture

The country’s esports strategy is part of a bigger effort by the government to enhance Andorra’s strengths as a hub for the digital economy, with a particular focus on four ‘strategic’ industries: esports, fintech, healthtech and biotech. At time of press, a digital economy bill is also being discussed in parliament. If approved, it will pave the way for the creation of special economic zones and regulatory sandboxes focusing on digital services in a major effort to lure tech entrepreneurs to the country. 

“We are not focusing on huge investors, but rather entrepreneurs, especially in the digital economy ... We want to attract talent and build an ecosystem around that talent,” Mr Gallardo says. 

The ultimate goal of the government’s strategy is to diversify the economy away from traditional sectors such as financials, real estate, tourism and commerce. Foreign investment accounted for 18.7% of the country’s $3.3bn income in 2021, with most of the capital (69.8%) coming from Spain and France, according to figures from national investment promotion agency Andorra Business. Financial assets comprised 31.5%, business and other services providers 21.9%, real estate 21.7% and commerce 19.3%, with the remainder going to other sectors, such as hotels and manufacturing. 

Andorra’s YouTubers have put the country on the map for esports, but building a whole digital ecosystem around them will not be a game. 

This article first appeared in the June/July 2022 edition of fDi Intelligence. Read the online edition of the magazine here.