Amendment to Andorra’s Foreign Real Estate Investment Tax Regulation: Effective Residence and Exemptions

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The foreign investment tax: a continuously evolving tax

The Real Estate Foreign Investment Tax was created by the Law of 8 February 2024 with a clear purpose: to introduce a corrective mechanism within the Andorran real estate market when foreign investment components are involved.

It is not a general tax on all property transactions. It applies to certain acquisitions of real estate located in the Principality when specific circumstances occur, linked to:

• non-resident individuals,
• residents with limited seniority,
• companies with significant foreign shareholding.

Its function is not to prohibit investment, but to regulate its impact and contribute to the financing of public policies related to housing.

To better understand the general framework of foreign investment in the country, you may consult The Real Estate Foreign Investment Tax in Andorra: purpose, structure and practical application.

Why was this tax introduced?

The context is essential to understand its implementation. Between 2019 and 2025, the Andorran real estate market experienced significant pressure on prices and housing access. The increase in demand, particularly linked to new residents and foreign investment, placed housing at the center of public debate.

This scenario is analysed in greater detail in The Andorran real estate market (2019–2025): prices, new developments and housing access.

Faced with this reality, the legislator opted for a selective model: allowing investment, but introducing a corrective tax mechanism and linking certain tax benefits to affordable rental policies (To learn more about the tax relief, you may consult The 90% tax relief on the Real Estate Foreign Investment Tax in Andorra).

The tax therefore forms part of a structural policy rather than an isolated measure.

2024–2026: from initial design to strengthened regulation

The initial Regulation was approved by Decree 76/2024, developing the law and establishing:

• the advance payment system before a notary,
• the subsequent self-assessment mechanism,
• formal control of exemptions,
• the operational definition of taxable persons.

In 2025, with Law 5/2025 ( Law 5/2025 (Omnibus): a paradigm shift in foreign investment and housing access in Andorra) and Decree 142/2025, the regime was reinforced.

Particularly in three areas:

• redefinition of the concept of effective and permanent residence,
• linking tax benefits to affordable rental over extended periods,
• greater control and precision in exemption cases.

This reinforcement confirms that housing is now a structural issue for the country.

Finally, at the beginning of February 2026, the law underwent a further amendment, raising the minimum rate to 6% (Law 2/2026 in Andorra (Omnibus II): changes in residence, deposit and foreign investment).

The 26 February 2026 amendment: a technical adjustment with real impact

Decree 58/2026 of 26 February introduces a specific amendment to the Regulation. It does not alter the nature of the tax nor its political objectives, but it adjusts certain aspects that, in practice, could generate disproportionate situations. These are detailed below:

🔹 Study-related absences count as effective residence

The current regulation requires proof of three years of effective and permanent residence within the previous ten years in order to avoid payment of the tax. Although it may appear, at first glance, non-discriminatory, certain situations could run counter to the spirit of the rule. In this regard, the previous wording excluded from the calculation those periods during which a resident had temporarily moved abroad for academic reasons.

With the new amendment, absences for study purposes now count as effective residence, preventing residents (especially younger individuals) temporarily studying abroad from being penalised. It is a coherent adjustment aligned with social reality and avoids penalising academic trajectories..

🔹 Elimination of the nationality criterion

Another relevant point is the elimination of any differentiated reference based on nationality. Until now, Andorran nationals always benefited from non-taxation. Now, the criterion is exclusively linked to:

• residence or non-residence,
• seniority of effective residence in the Principality.

The regime no longer pivots on whether a person is Andorran, but on whether they meet objective criteria of genuine connection with the country. This reinforces technical coherence and avoids potentially discriminatory interpretations.

🔹 Simplification in exempt transactions

Finally, a procedural clarification is introduced: in exempt transactions, it is no longer necessary to make the advance payment, provided that the exemption is accredited before a notary.

This represents a relevant administrative simplification that reduces compliance burdens without limiting tax control.

Conclusion: continuity of the model with technical corrections

The 2026 reform does not represent a structural change to the model introduced in 2024 nor to the reinforcement adopted in 2025. However, it strengthens coherence regarding effective residence, removes references linked to nationality, adjusts procedures in exemption cases, and avoids unintended effects in academic situations.

The regulatory evolution demonstrates that the legislator continues to treat housing as a strategic priority, while introducing adjustments when the regime may generate distortions.

📞Are you considering acquiring property in the Principality?

If you are planning to relocate or make a real estate investment, it is essential to understand the implications that any decision may generate.

You may contact us through the contact Form or book your meeting at the bottom of the page to analyse your case with technical rigor and strategic vision.

Last review: February 2026