The Andorran economy is primarily based on trade and tourism, with the traffic between France and Spain providing most of the revenue. Approximately nine million tourists visit Andorra each year.
The Andorran banking system is of some importance as a tax haven for foreign financial transactions and investments. Andorra also is a tax haven because there are no direct taxes.
Prior to the creation of the European Union there was an active trade in consumer goods, which were duty-free in Andorra. With the creation of the Union, Andorran manufactured goods remain tariff free, but Andorran agricultural products are subject to EU tariffs. The production of agricultural goods is limited, though, as only 2% of the land is arable.