Andorra la Vella

Andorra la Vella is the capital and commercial heart of this microstate nestled between France and Spain—Europe's highest capital at 1,023 meters elevation, serving as the engine of an economy where tourism accounts for 80% of GDP. The parish hosts the principal shopping district that draws 8+ million visitors annually seeking duty-free goods at Europe's lowest VAT rate (4.5%), luxury brands, and electronic goods without import duties. Government institutions concentrate here alongside banks that manage the financial services sector contributing 10% of tax revenue. The principality's unusual status—nominally co-ruled by the French President and the Bishop of Urgell since 1278—creates a governance structure that has proven remarkably stable across seven centuries. Tax reforms since 2011 removed Andorra from the OECD blacklist, though rates remain Europe's lowest (10% maximum personal income tax, 10% corporate). The parish merges seamlessly with neighboring Escaldes-Engordany into a single urban conurbation. Year-round commerce sustains the economy beyond ski season, though winter remains peak period. By 2026, Andorra la Vella's trajectory depends on whether shopping tourism survives e-commerce competition, whether financial services adapt to transparency requirements, and whether the capital can capture more high-value visitors as day-trippers provide declining margins.