The Foreign Real Estate Investment Tax in Andorra: purpose, structure and practical application

Reading time: 8 minutes

🏁 Introduction

Since 2012, foreign investment in Andorra — both in companies and in real estate — has been a cornerstone of the country’s economic openness.
The liberal framework introduced by Law 10/2012 of 21 June allowed, for the first time, up to 100% foreign ownership of Andorran companies and the purchase of property without prior residence.

However, the rapid rise in real estate demand resulting from this liberalisation generated significant pressure on the housing market.
In response, the Government adopted a temporary suspension of new authorisations in September 2023 (Law 16/2023) while preparing a more balanced framework.

The outcome of that structural reform is Law 3/2024 of 1 February, on the Foreign Real Estate Investment Tax, developed by Decree 76/2024 of 29 February, which comprehensively regulates how foreign investors must contribute within the real estate sector.

➤ For a better understanding of the general framework, you can read Foreign investment in Andorra: evolution and current framework.

💡 Purpose of the new tax

The tax pursues a dual purpose:

• Economic and social: to contain speculative pressure on land and housing, especially in densely populated urban areas.
• Financial: to provide the State with resources to support housing, sustainability and local development policies.

It is not intended to discourage foreign investment, but rather to align it with the country’s public interest — promoting responsible, long-term real estate capital investment.

➤ For a complete overview of the Andorran tax system, see Taxation in Andorra: benefits and obligations.

🧾 Scope of application: who must pay

The tax applies to foreign real estate investments as defined by Law 10/2012, specifically to:

A) Natural persons

• Non-resident individuals in Andorra.
• Residents with less than three consecutive years of uninterrupted residence when purchasing real estate.

B) Legal entities

• Foreign legal entities.
• Andorran companies with 50% or more foreign ownership or voting rights, directly or indirectly.

Therefore, the tax affects not only individual investors but also Andorran holding structures with foreign capital.

➤ To understand how to set up a company in the country, see Incorporating a company in Andorra: steps and advantages.

➤ You may also read Types of residence in Andorra: active, passive and fiscal to understand how residency duration impacts tax obligations.

⚖️ Taxable event and accrual

The taxable event is the acquisition of ownership or any real right of enjoyment over immovable property located in Andorra (e.g. usufruct or bare ownership).
The tax becomes payable at the moment the public deed of sale is executed or when an equivalent legal act transfers ownership.

In cases of real estate development, the tax is triggered upon the acquisition of the land or when formalising the right of surface required for construction.

💰 Tax base and rates

The taxable base is determined by the total acquisition value of the property or right obtained, including any expenses, premiums or ancillary considerations.

Progressive tax rates apply cumulatively according to the total number of real estate properties acquired in Andorra by the same investor:

• 1st acquisition ➤ 3 %
• 2nd acquisition ➤ 5 %
• 3rd acquisition ➤ 8 %
• From the 4th acquisition ➤ 10 %

For legal entities, the calculation also includes acquisitions made by subsidiaries or affiliated companies, in proportion to their effective participation in capital or voting rights.

➤ The Omnibus Law introduces certain nuances on this matter. To learn more, we recommend reading the article The new Omnibus Law: a paradigm shift in foreign investment and housing policy in Andorra.

🏠 Allowances and refunds

The law introduces incentives for socially responsible investment:

• 90% allowance if the property is rented as a primary residence for a minimum period of 10 years.
• The allowance is granted upon request and verification by the Administration, requiring a registered lease agreement and proof of effective use.

➤ To understand in detail the applicable requirements, conditions and procedures, you can read the article The 90 % Tax Relief on Foreign Real Estate Investment in Andorra.

Additionally, the regulation provides for partial refunds in cases of sale before the 10-year term for justified reasons (e.g. force majeure or tenant insolvency duly evidenced).

➤ To better understand residential criteria and the concept of primary residence, read Living and working in Andorra: what you need to know before relocating

📑 Formal obligations and procedure

• Authorisation request and advance payment

Before completing the acquisition, the investor must apply for foreign investment authorisation under the Regulation approved by Decree 137/2025, and make an advance payment of the tax.
This payment is based on the estimated acquisition value and must be certified by the competent Ministry.

• Self-assessment and notarial procedure

The final self-assessment must be filed before the notarial signing, accompanied by the investment authorisation and proof of payment.
The Andorran notary cannot authorise the deed without these documents, which must be attached to the main notarial record.
Failure to comply invalidates the transaction for registration purposes.

• Registration and control

The Register of Foreign Investments keeps a copy of the file and verifies proper tax settlement.
The tax authority may perform value checks and issue additional assessments if the declared price does not match the property’s real market value.

👉 If you plan to invest in Andorra, it is advisable to do so with expert guidance ensuring proper authorisation and tax settlement.

💎 Exemptions and non-taxable situations

The tax does not apply in the following cases:

• Acquisition of real estate by the State, Comuns (municipalities) or other public entities.
• Corporate restructuring operations under Law 17/2017 of 20 October on the fiscal regime for business reorganisations.
• Mortis causa (inheritance) transfers.
• Acquisitions made by legally recognised non-profit entities pursuing social purposes.

These exceptions reinforce the selective and purposeful nature of the tax.

⚠️ Sanctions and nullity of transactions

Failure to declare or pay the tax constitutes a serious infringement and may result in:

• A proportional fine of up to 150% of the unpaid amount.
• Nullity of the acquisition act if proven to be made in fraud of the law or without prior authorisation.
• Notification to the Register of Foreign Investments, blocking new transactions by the same investor until full regularisation.

📅 Entry into force and transitional regime

Law 3/2024 entered into force on 2 February 2024, the day after its publication in the BOPA, while its implementing Decree 76/2024 took effect on 1 March 2024.

However, the first transitional provision excludes from its application the following investments:

• Authorised before 5 September 2023, provided the acquisition was completed before 1 March 2024.
• Under review on that date, if the application was duly filed under previous regulations.

This ensures legal certainty and legitimate expectations for investors who had initiated operations under the former framework.

🌍 Overall perspective: a tax with strategic purpose

The Foreign Real Estate Investment Tax is not a barrier but an instrument of economic policy.
It allows the country to remain open to international capital while ensuring that such investment contributes to the common good:

• funding affordable housing,
• urban sustainability,
• control of speculation.

For investors seeking transparency, permanence and sound planning, this tax reaffirms Andorra’s commitment to a stable, mature and predictable economic model.

If you are considering investing in Andorra or optimising your structure efficiently, you can book your personalised consultation below or contact us directly through the form.

📚 Related articles

• Double taxation treaties and practical application — How to legally avoid double taxation and optimise global tax exposure.
• Andorra’s international evolution: from tradition to a global economy — Economic context and Andorra’s growing global openness.

Last reviewed: October 2025