Real estate transfer tax (ITPI) in Andorra: structure of the tax, current rates and its impact on a property purchase

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🏛️ Why the ITPI is essential to understanding a property purchase in Andorra

Anyone purchasing property in Andorra will encounter a tax that appears in every deed and directly affects the final cost: the Real Estate Transfer Tax (ITPI).

It is a simple, stable and predictable tax, but also one of the main sources of revenue for local parishes, which is why all of them have applied the maximum rate for many years.

It is also a tax shared between the Government and the parishes, a structure that shapes how public services and infrastructure are funded across the country.

➤ If you are considering a purchase, we also recommend Buying property in Andorra: real risks and how to protect your investment.

🧭 Legislative rationale: what problem did this tax aim to solve?

In the early 2000s, Andorra needed a stable source of funding for several essential projects, including:

• improvements to roads and tunnels
• expansion of service networks
• urban modernisation
• infrastructure required for the country’s growth

The underlying philosophy of the law is clear:

“Public infrastructure increases the value of real estate; therefore, those who benefit directly should contribute to its financing.”

This principle led to a distinctive model: the Government and each parish share the tax, each applying its own rate and managing its own revenue.

🏠 What the ITPI taxes (and what it does not)

The ITPI is an indirect tax levied when property or related rights are transferred. It applies to:

• real estate purchases
• donations and inter vivos transfers
• creation of real rights (bare ownership, usufruct, easements…)
• transfers of company shares that effectively constitute a transfer of real estate

In all cases, the taxpayer is the buyer.

The ITPI does not apply to transactions subject to the IGI (Andorra’s VAT-equivalent), which is typical in new-build acquisitions. These regimes are alternative.

➤ To understand the IGI and why it has such a low rate, see VAT in Andorra: how the IGI works.

📐 The taxable base: the property’s “real value”

The taxable base is the real value of the property or right transferred.
It usually coincides with market value, but parishes may revise it if they detect:

• unusually low declared values
• inconsistencies with comparable transactions
• discrepancies between the declaration and the property’s condition

This principle aligns with international standards and aims to tax purchasing capacity fairly.

🧩 A shared tax: Government + Parishes

As noted earlier, the tax has two components: governmental and parish-based.
The Government is actually the party that benefits least from these operations, as shown below.

🇦🇩 Government rate: 1%

The Government applies a flat 1% rate on all transfers.
There is one major exception:

If the buyer rents the property for residential use for 5 years, the Government reduces its 1% to 0%.

This incentive supports the expansion of Andorra’s rental housing stock.
It follows a logic similar to that explained in The 90% reduction on the Foreign Real Estate Investment Tax in Andorra.

🏘️ Parish rate: between 0.5% and 3%

Parishes may set their own rate, within the legal limits:

• minimum: 0.5%
• maximum: 3%

The parish rate is independent from the Government’s, applied to the same taxable base.

🗂️ Current rates

Given that this tax is the primary source of parish funding, and considering current market conditions, all parishes have applied the maximum 3% for many years.

Current rates:

• Andorra la Vella: 3%
• Canillo: 3%
• Encamp: 3%
• Escaldes-Engordany: 3%
• La Massana: 3%
• Ordino: 3%
• Sant Julià de Lòria: 3%

Thus, in practice:

• 4% total (1% Government + 3% Parish)
• 3% if the property is rented for 5 years (Government reduction)

For more context, see The parishes of Andorra: structure, functions and territorial features.

🌍 Andorra in context: international comparison

To properly assess the competitiveness of the ITPI, it is helpful to compare it with the systems used in neighbouring countries:

🇪🇸 Spain – ITP: 6%–10%

In Catalonia and Valencia, the applicable rate is 10%.
Result: between 50% and 150% higher than the Andorran rate.

🇫🇷 France – DMTO: 5.80%

A single nationwide rate, clearly higher than the tax burden in Andorra.

🇵🇹 Portugal – IMT: 5%–7.5%

In most cases, these rates are also higher than Andorra’s ITPI,
except for certain acquisitions of a primary residence benefiting from reduced brackets.

✔️ Summary

Andorra maintains a lower acquisition cost, a more transparent framework, and a simpler tax structure compared with its neighbours.

➤ For further insight, see How real estate capital gains are taxed in Andorra

🧠 Practical considerations for buyers and investors

When calculating the real cost of acquiring property in Andorra, keep in mind several often-overlooked elements:

• The general rate is 4%, added to the purchase price.
• If rented for 5 years, the total tax drops to 3%.
• All parishes apply the maximum rate, simplifying planning.
• The ITPI is independent from the IGI, whose rate is 4.5%.
• The ITPI is a key component of the total fiscal cost of acquisition.

➤ More information in Taxes when buying property in Andorra

As explained in Buying property in Andorra: real risks and how to protect your investment, other costs must also be considered before purchasing.

📞 Need an analysis before buying or clarifying any doubts?

If you would like us to assess the full fiscal impact of your transaction — ITPI, IGI, capital gains, residency-related considerations and legal structuring — or if you wish to clarify anything before investing, we can support you with discretion and sound judgement.

We have extensive experience in real estate operations, both for private buyers and investors.
Book your meeting or contact us through our form. We will be delighted to help.

Last updated: November 2025