Tax on foreign investment in Andorra in 2024
The Council of Ministers of the Principality of Andorra has approved the implementation of an additional tax on foreign investment in real estate properties for the year 2024. The bill has been presented by Conxita Marsol, Minister of the Presidency, Economy, Labor and Andorran housing.
The purpose of this new law is to establish and regulate the fundamental aspects of the Tax on foreign investment in real estate in the Principality of Andorra. The tax percentages will range between 3% and 10%, depending on the quantity and type of properties acquired, and will be applied to the real value of the investment made.
Who is this new tax on real estate investment with foreign capital aimed at?
• Natural persons not resident in Andorra.
• All foreign legal entities.
• Natural persons with less than 3 years of residence in Andorra, who make a foreign real estate investment, regardless of their nationality.
• Andorran legal entities with foreign participation of 50% or more.
• Andorran legal entities, with participation of non-residents in Andorra, or of residents of less than 3 years, in their capital or in their voting rights, direct or indirect, less than 50% and greater than 5%, and that carry out a foreign real estate investment.
With the incorporation of this law, the aim is to avoid the application of tax avoidance mechanisms on investments made by people who are not sufficiently established in Andorra.
What is the new tax on real estate investment with foreign capital in Andorra like?
The newly established tax on foreign investment in real estate in Andorra will be tiered, varying from 3% to 10% of the real value invested in properties with foreign capital.
The first tranche starts at 3%, applied to the purchase of land for a single-family residence, apartments, studios, commercial premises of up to 250 square meters, with a maximum of 2 storage rooms and 2 parking spaces.
The next step is 5%, valid for the acquisition of the second to fifth single-family property, or the second to fifth apartment, studio or commercial premises of up to 250 square meters, accompanied by 2 storage rooms and 2 parking spaces. Also applies when purchasing 10 parking spaces.
For purchases ranging from the sixth to the ninth single-family property, apartment, studio, or commercial premises of up to 250 square meters, with 2 storage rooms and 2 parking spaces, the tax rate will be 8%. This same rate applies if you choose to buy between 11 and 18 parking spaces instead of the properties mentioned.
Finally, the 10% tax rate applies to investments that exceed the previous limits, or that do not fit the mentioned categories, such as investment in multiple plots of land or dedication to urban or real estate projects.
Tax credit applicable if the investment is intended for renting homes in Andorra
A 90% discount on the tax will be applied for foreign investment in real estate intended to be the main residence for at least 10 years. This same bonus will be applied to the purchase or construction of properties intended for the promotion of long-term rental housing, regardless of the rental price.
Minister Conxita Marsol has highlighted that the purpose of this tax is to control speculation in foreign investment in real estate, stimulate the housing rental market and provide income to the government without affecting residents.
