On March 6, 2025, Andorra approved the Omnibus Law, an ambitious regulation aimed at promoting sustainable growth and ensuring the right to housing. This law, which will come into force 15 days after its publication in the Official Gazette (expected on March 26), introduces significant changes in key areas such as foreign investment, tourist accommodation, and access to housing. Below, we break down the main aspects of this law and how they could impact the Principality’s society and economy.

Foreign investment: Increased control and transparency

Andorra, known for its openness and appeal to international investors, has decided to tighten the regulation of foreign capital inflows. The Omnibus Law introduces measures to prevent risks such as money laundering, real estate speculation, and threats to national security.

What changes?

• The definition of foreign investor is revised: it now includes residents who cannot prove 3 years of effective residence within the last 10 years, in addition to non-residents.
• A new Foreign Investment Registry is created, mandatory for all operations, including subsequent changes.
• Restrictions and prohibitions on investment are strengthened, including bans on individuals with serious criminal records.
• Real estate development by foreign investors is prohibited, unless at least 50% of the project is dedicated to affordable rental housing.
• Investments must generate added value and be effectively implemented, under government oversight, which may declare them void if requirements are not met.

Expected impact:

These measures aim to curb speculation and protect the local market, although they may make it more difficult for foreign capital to enter, especially in the real estate sector. Investors will be required to act with greater transparency and comply with stricter conditions.

Tourist accommodation: More control over short-term rentals (VUT)

One of the most notable aspects of the law is the regulation of Tourist Use Housing (VUT), aiming to limit their impact on the housing market and ensure that housing resources serve socially beneficial uses.

What changes?

• The number of VUTs in a building is capped: they may not exceed 30% of the ownership shares.
• Authorizations are valid for a maximum of 3 years and are subject to renewal.
• The administration may deny renewal if there is no evidence of a serious attempt to rent the property as regular housing at market rates for at least 6 months.
• The sanctioning regime is strengthened, and revocation due to inactivity is foreseen.

Expected impact:

These measures are expected to reduce the number of homes available for tourist rental, freeing up more for long-term residential use. However, they may also cause friction with property owners, who will see their investment options limited.

Assignment of vacant homes: A measure to improve housing access

One of the most innovative provisions of the Omnibus Law is the mandatory assignment of vacant properties, aimed at combating speculation and increasing the supply of affordable housing.

What changes?

• A home is considered vacant if it shows no electricity or water consumption for 18 months or remains unjustifiably unoccupied.
• The Government may require temporary assignment of such homes for affordable rental, with financial compensation.
• This provision will enter into force six months after the law’s publication.

Expected impact:

This measure could increase the stock of affordable housing, particularly benefiting young people and families with difficulties accessing the market. However, it raises questions about the suitability of these properties and how owners will react.

Tax Changes: Incentives for affordable housing

The law also introduces tax reforms related to housing, aiming to encourage affordable rentals and discourage speculation.

What changes?

• The thresholds for exemption from the Property Transfer Tax (ITP) are raised: it now applies to homes valued up to €600,000 and for taxpayers earning up to four times the minimum wage.
• Deductions in Personal Income Tax (IRPF) and Corporate Tax (IS) are introduced for rentals priced below €9/m².
• The speculative resale surcharge is reinforced: 10% if the property is sold within 2 years, 5% if sold between 2 and 5 years.
• An additional levy on vacant homes is introduced.

Expected impact:

These measures aim to promote affordable rentals and penalize speculation. However, Andorra’s generally low tax burden may limit the real impact on investor behavior or government revenue.

New limits on foreign real estate investment

In addition to general restrictions, the law establishes specific quantitative limits:

Foreign individuals or recent residents (less than 3 years of effective residence) may only acquire:

• One single-family home, or
• Two apartments, flats, or studios (including up to 3 storage rooms and 3 parking spaces per unit), or
• Up to 6 parking spaces, or
• One commercial-use property if engaged in an economic activity.

Once the limit is reached, investors must wait 10 years before they can invest again. Inherited properties or those allocated to affordable rental for at least 10 years are excluded from this calculation.

Other regulatory reforms

• In company law, mandatory information in the shareholder registry is expanded.
• In immigration law, the conditions for granting or renewing permits are tightened, especially to prevent abuse of passive residency schemes.
• The Urban Leasing Law is amended to strengthen the sanctions regime and introduce new offenses, such as unauthorized subletting.

Conclusion: A shift in Andorra’s economic policy

The Omnibus Law marks a turning point in the regulation of key sectors such as foreign investment, tourism accommodation, and housing. With a more protectionist approach and greater state intervention, the law aims to protect the local market and ensure that housing resources serve socially useful purposes.

However, the real impact of these measures will depend on their implementation and the response of various economic and social actors. Additionally, Andorra’s small market size (with a population just over 80,000) means that foreign capital inflows have a proportionally greater impact than in other countries, partially justifying such measures.

We will have to wait for potential amendments and the development of implementing regulations to assess the law’s actual effectiveness and scope. What is clear is that the Omnibus Law represents a shift away from the liberalization trend that had prevailed since 2012.