Real estate capital gains tax in Andorra

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🏁 Introduction

In January 2024, the Principality of Andorra completed a major reform of its direct taxation system through Law 5/2023 of 19 January, which amended the country’s three main taxes: IRPF, IS and IRNR.

This reform led to the repeal of Law 21/2006 on real estate capital gains, integrating its provisions into the above-mentioned taxes. As a result, the taxation of real estate gains is no longer an independent tax but now forms part of the general income tax framework.

The aim of this change is to simplify tax management, reinforce system coherence, and preserve an anti-speculative mechanism designed to discourage quick, profit-driven resales.

➤ We recommend reading the article on Andorra’s real estate market to better understand the context behind this reform.

📜 Historical evolution

The real estate capital gains tax was first introduced under Law 21/2006 of 14 December, aiming to tax the appreciation of real estate assets located in the Principality — a value increase partially attributed to public investment. Notaries acted as withholding agents.

Over time, Andorra developed a more comprehensive tax system:

• Law 94/2010 on income tax for non-residents (IRNR).
• Law 95/2010 on corporate income tax (IS).
• Law 5/2014 on personal income tax (IRPF).

Finally, Law 5/2023 repealed the 2006 law and redistributed its provisions among the three main taxes, preserving its spirit within a unified and consistent framework.

➤ The article Tax system in Andorra: structure, rates and real advantages provides a complete overview of the country’s fiscal landscape.

⚖️ Legal framework in force since 2024

Capital gains derived from the sale of real estate located in Andorra are now taxed under the corresponding regime of each taxpayer:

• IRPF – for tax residents (individuals).
• IS – for tax-resident companies.
• IRNR – for non-residents without a permanent establishment.

In all cases, an anti-speculative surcharge of 5% applies to property sales made within two years of acquisition. This surcharge is added to the general 10% rate, resulting in an effective rate of 15%, as set out in the additional provisions of Law 5/2014 (IRPF) and Law 95/2010 (IS), both amended by Law 5/2023.

👥 Taxation of resident individuals (IRPF)

Profits arising from the sale of real estate are treated as capital gains and included in the IRPF tax base at the general rate of 10%.

🔹 Surcharge for speculative transactions

If the sale occurs within two years of acquisition, the 5% surcharge applies, increasing the effective rate to 15%. This mechanism aims to discourage short-term resales of property.

🔹 Reducing coefficients based on holding period

Starting from the fifth year of ownership, reducing coefficients (art. 48 IRPF) progressively decrease the tax burden.
After ten years, the taxable impact becomes null.

Indicative effective rates:

• 0–2 years → 15% (with surcharge)
• 2–5 years → 10%
• 5–6 years → 8%
• 6–7 years → 6%
• 7–8 years → 4%
• 8–9 years → 2%
• 9–10 years → 1%
• More than 10 years → Exempt

🏢 Taxation of resident companies (IS)

Capital gains realised by resident companies are included in the general taxable base and subject to a 10% corporate income tax rate (art. 66 of Law 95/2010).

If the sale is made within two years of acquisition, a 5% surcharge also applies (additional provision 2 of Law 95/2010, as amended by Law 5/2023). The effective rate therefore reaches 15% for speculative operations.

Unlike individuals, companies are not eligible for reducing coefficients or exemptions based on holding periods.

This regime also applies to the transfer of shares or equity interests in companies where 50% or more of total assets consist of real estate located in Andorra (art. 7 of Law 95/2010).

🌍 Taxation of non-residents (IRNR)

Capital gains earned by non-residents are governed by Law 94/2010 (IRNR):

• General rate: 10%.
• Special surcharge: +5% for sales within two years → effective rate 15%.

Furthermore, Article 63 establishes a 5% withholding tax on the total sale value when the seller is a non-resident without a permanent establishment.

This withholding acts as a payment on account and can be refunded within six months upon proof of the final tax liability.

💡 Anti-speculative purpose and system coherence

The new fiscal framework retains the essence of repealed Law 21/2006, now integrated into a more harmonised structure across the three main taxes.

The 5% surcharge replaces former tax brackets and continues to serve its deterrent function against short-term speculative sales, ensuring consistency throughout the tax system.
While a 15% rate may seem modest, it represents a 50% increase over Andorra’s nominal rate, reinforcing the country’s anti-speculative intent.

Operationally, tax collection remains delegated to notaries, who carry out the corresponding withholding and ensure administrative oversight.

Conclusion

The current regime for real estate capital gains in Andorra establishes a simplified, stable and transparent framework, with a 10% general rate and a 5% surcharge on speculative operations.

This model strengthens Andorra’s fiscal consistency and legal certainty, while maintaining an effective deterrent against short-term transactions.

👉 If you wish to assess the fiscal impact of a real estate transaction or plan it strategically, you can book a personalised consultation below or fill in the contact form.

Last updated: November 2025