Taxes when buying property in Andorra: real costs, fiscal structure and how to optimise your purchase

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🏙️ Understanding property taxation before buying in Andorra

Buying property in Andorra —whether to live in or as an investment— requires a clear understanding of how real estate transactions are actually taxed.

The Andorran fiscal system is stable, predictable and significantly lower than that of neighbouring countries. But that does not mean it is simple: new builds, second transmissions, capital gains, mortgages, foreign investment rules, notaries, corporate structures and future taxation form a complex ecosystem that requires strategic analysis.

This article provides a rigorous, accessible overview of every tax and cost involved in a property purchase in Andorra —and how to optimise them based on your profile as a buyer.

➤ To understand the most common risks, you may find helpful our article Buying property in Andorra: real risks and how to protect your investment.

🧾 1. New build vs. second transmission: two different tax regimes

Andorra has two alternative fiscal regimes depending on whether the property is a first transmission (new build) or a second transmission.

🏗️ New build: IGI (local VAT) at 4.5%

When the seller is a developer or constructor, the operation is subject to the Impost General Indirecte (IGI), Andorra’s equivalent to VAT:

• General rate: 4.5%
• Reduced rate (exceptional cases): 1%

IGI replaces ITPI entirely and is significantly lower than VAT in Spain (10%) or France (20%).

➤ To understand this tax: VAT in Andorra: how the IGI (General Indirect Tax) works

It is also important to note that IGI may be deductible when the purchase is made through a company and the property is genuinely linked to the company’s activity.

🏠 Second transmission: ITPI (3%–4%) — the tax that funds both Government and Communes

In transactions between private individuals, or when IGI does not apply,Real estate transfer tax (ITPI) in Andorra applies.

ITPI is shared between two public institutions:

• 1% Government of Andorra
• 0.5%–3% Commune (municipality)

At present, all parishes apply the maximum 3%, which results in:

• 4% total, or
• 3% if the property is rented as a primary residence for 5 years (thanks to the government’s 1% exemption)

ITPI is the main source of revenue for the Communes, which explains its stability and almost no legislative variation.

➤ For detailed analysis: Real estate transfer tax (ITPI) in Andorra

🧩 2. Other taxable real estate operations: contributions, real rights and indirect transfers

Beyond standard purchases, several operations are also taxed, particularly relevant for entrepreneurs and investors:

• Non-cash contributions of real estate into a company
• Capital increases involving real estate
• Indirect transfers (selling shares that effectively represent real estate)
• Creation of real rights (usufruct, bare ownership, easements, superficies)

In most cases ITPI applies, unless the operation falls under IGI due to the transferor’s business activity.

Before any restructuring or transfer, a proper fiscal analysis is essential to avoid unexpected costs.

🧭 3. New fiscal framework: Law 3/2024 and the 2025 Ómnibus Law

Between 2024 and 2025, Andorra implemented the most significant real estate tax reform in decades: the Foreign Real Estate Investment Tax (IIEI).

This reform especially affects buyers without consolidated tax residency or companies with foreign shareholding.

💰 New tax on foreign real estate investment (IIEI)

The tax applies to buyers who are non-residents or have been residents for fewer than 3 years.

Cumulative tax rates:

• 1st acquisition ➤ 3%
• 2nd acquisition ➤ 5%
• 3rd acquisition ➤ 8%
• 4th and subsequent ➤ 10%

The taxable base is the property’s real value, and the tax must be settled before signing at the notary.

➤ For detailed information: Foreign Real Estate Investment Tax in Andorra: purpose, structure and practical application

🏠 90% rebate for affordable rental housing

A 90% rebate applies if the property is rented as a primary residence for 10 years, under strict compliance conditions.

All details can be found in: The 90% rebate on the Foreign Real Estate Investment Tax in Andorra.

🛑 Reinforced controls: 2025 Ómnibus Law

The Ómnibus Law approved in 2025 strengthens the framework:

• Limits purchases by non-residents (1 single-family home or 2 apartments)
• Prohibits foreign real estate development (with limited exceptions)
• Introduces severe penalties
• Adds controls on vacant or tourist-use apartments
• Adjusts amortisation and capital gains rules

➤ For more details: The new Ómnibus Law: a paradigm shift in foreign investment and housing policy

📈 4. Capital gains: IRPF, Corporate Tax and Non-Resident Tax

Capital gains arising from the sale of a property are taxed depending on who sells:

• IRPF if the seller is a resident individual
  You can learn more about this tax in our article Personal Income Tax (IRPF) in Andorra
• Corporate Tax (IS) if sold through a company
  You can learn more about this tax in our article Corporate Tax in Andorra: rates, special regimes and deductions
• Non-Resident Income Tax (IRNR) if the seller is a non-resident
  You can learn more about this tax in our article Non-Resident Income Tax (IRNR) in Andorra

Applicable rates:

• 10% general rate
• +5% anti-speculative surcharge if sold within 2 years
• Reduced rates in some cases
• Possible exemptions for primary residence

➤ For a complete understanding of the capital gains regime, you can read How real estate capital gains are taxed in Andorra

🧾 5. Notary fees: official scale and how costs are calculated

In addition to taxes, every property transfer in Andorra entails notary fees, which are regulated by:

• Notary Law 14/2021
• Official fee schedule of 3 May 2000 (still in force via transitional provision)

Sales and mortgages are quantia transactions, and fees are calculated using decreasing brackets based on the property price.

💶 Notary cost for a property purchase

Typically:

• 0.6% to 1% of the purchase price

Includes:

• Bracketed notary fees
• Certified copies
• Escrow handling (if applicable)
• Additional documentation

🏦 Cost of establishing a mortgage

Mortgage deeds are calculated on the guaranteed capital, not just the loan amount.

Usual cost:

• 0.5%–1% of the guaranteed capital

Additional costs:

• Appraisal (around €300, varying by property)
• Technical certificates
• Administrative management
• Small registration or administrative fees

🏢 6. Buying as an individual vs. buying through a company

The legal structure used for the acquisition has a direct impact on present and future taxation, asset protection and operational efficiency.

👤 Buying as an individual

This is usually the simplest option, but with fewer tax optimisation possibilities:

• Lower initial cost
• Simpler process
• Possible exemptions for primary residence
• Limited ability to deduct expenses or amortise the asset
• Lower long-term capital gains impact in some scenarios

🏢 Buying through a company

More flexible and tax-efficient, especially for investment or rental activity:

• Allows property amortisation
• Optimises future capital gains taxation
• Real business expenses become deductible
• More efficient for multiple acquisitions
• Annual corporate compliance costs
• IGI may be deductible if the property is linked to the company’s activity

Also valuable for:

• Succession planning
• Asset protection
• Future transfers or restructuring

➤ For a broader overview Taxation in Andorra: structure, rates and real advantages

💼 7. Other relevant costs in a property transaction

Aside from taxes and notary fees, buyers should also anticipate:

• Real estate agency commission (typically ~5%)
• Technical certificates (often expired or missing)
• Regulatory compliance works
• Registry fees
• Home insurance (mandatory with a mortgage)
• Legal advisory fees
• Costs of future transfers (capital gains, legal formalities)
• Bank fees, mortgage setup or cancellation costs

🧭 8. How to optimise a property purchase in Andorra

There is no universal strategy: each case requires tailored analysis.
This is where a specialised consultant truly makes a difference.

Good planning allows you to:

• Reduce current and future taxation
• Avoid documentation errors or penalties
• Choose the best ownership structure (individual or company)
• Detect encumbrances, censuses, liabilities and risks
• Ensure clear contracts and real guarantees
• Integrate the purchase into your global asset strategy
• Anticipate secure succession or future transfers

➤ To understand the Differences between managers, advisers and consultants, you can read our dedicated article.

📞 Need an expert review before buying or structuring your purchase?

If you want us to review the total cost of your operation —ITPI, IGI, IIEI, capital gains, notary costs, corporate structure, tax strategy and documentary risks— or if you want guidance on how to make the best decision, we can assist you with rigor, discretion and strategic insight.

You can book your specialised consultation, or contact us through our form with no obligation.

We are driven by the commitment to help our clients make solid, long-lasting decisions, and to build relationships that stand the test of time.

Last update: November 2025