The Principality of Andorra, nestled in the heart of the Pyrenees between France and Spain, is renowned as a true tax haven. Every year, this small country attracts numerous foreign investors, seduced by its advantageous tax conditions. However, faced with a worrying rise in property prices, the Andorran government has recently taken steps to regulate foreign investment in this sector.
The Andorran real estate market in figures
Since the country's total economic opening in 2012, allowing the arrival of 100% foreign capital, property prices in Andorra have literally exploded. Between 2018 and 2023, they rose by more than 30%! In 2022, no fewer than 500 property purchase applications from foreign investors were authorized by the government.
The Principality attracts investors and companies from all over the world thanks to its attractive tax system. In 2016, 7,528 foreign direct investment applications were registered to set up a business or acquire at least 10% of the capital of an Andorran firm.
- The AND Capital team
Temporary suspension of investment authorizations
Faced with this situation, the Andorran Council of Ministers approved in September 2023 temporary suspension of real estate investment permits for non-residents. This emergency measure aims to avert a housing crisis for the local population. It was debated and voted by the General Government Council on September 7, 2023.
Introduction of a tax on foreign investment
At the same time, to control real estate speculation while still encouraging foreign investment, a bill to introduce a progressive tax on the purchase of real estate by non-residents :
- 3% for the purchase of a first single-family home
- 5% for the purchase of a single-family home
- 8% from 6th unit upwards
- 10% from the 10th property onwards
This new tax tool, which is not very restrictive compared to the many tax benefits and Andorra's tourist dynamism, will help finance the construction of infrastructure and housing for residents. The bill is due to be voted on in the 1st quarter of 2024, which would lift the current suspension of investment.
In the meantime, if you'd like to investing in real estate in Andorra or y transfer your tax residenceAND Capital's experts are at your disposal to advise and assist you. Do not hesitate to Contact us to help you plan yourtax optimization and expatriation in the Principality of Andorra.
