Buying Real Estate in Andorra: A Complete Guide to the Process in 2026
Foreign Investment Approval, Taxation, Acquisition Costs, and the Entire Process
2026 Update: Law 5/2025 of March 6, 2025, has fundamentally reformed the framework for foreign real estate investment in Andorra. In particular, it introduces new rules regarding acquisition limits and the intended use of properties. At the same time, Law 3/2024 established a specific tax on foreign real estate investment (6% or 10%), separate from the ITP. All acquisitions must now be evaluated in light of these two laws.
Andorran real estate is attracting a growing number of investors and prospective residents. A market under structural pressure, a tax system among the most competitive in Europe, and recognized regulatory stability: the case is strong. However, purchasing real estate in Andorra as a foreigner involves a specific procedure—including prior administrative authorization, a tax on foreign investment, and purchase limits—which this article details comprehensively for 2026.
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An Attractive but Regulated Market: What Every Foreign Buyer Needs to Know
Andorra is no ordinary real estate market. Its total area of 468 km², of which only a tiny fraction is actually suitable for construction, creates a permanent structural imbalance between supply and demand. In 2024, apartment prices rose by +15.3% across the country, with increases reaching +41.3% in Andorra la Vella. This trend reflects demand driven by three distinct factors: tax residents seeking to meet the investment requirement associated with passive residency, families wishing to settle permanently, and wealth investors attracted by rental yields and tax advantages.
For any foreign national, access to the market is legally possible but subject to certain conditions. Law 5/2025 of March 6, 2025, precisely defines the conditions for foreign real estate investment: prior administrative authorization is required before any deed is signed, regardless of the purchaser’s nationality. This point is fundamental: the authorization is not a post-acquisition formality but a condition for the validity of the deed (Llei ITP, Art. 2).
Why Real Estate Investment Is Part of a Broader Strategy
For individuals in the process of obtaining passive residency in Andorra, purchasing real estate serves two purposes simultaneously: building the required local assets (all or part of the required investment of €400,000 to €1,000,000) and establishing a permanent home in the Principality. For pure investors, Andorran real estate offers a combination of returns and tax benefits that is difficult to replicate elsewhere in Europe: rental income taxed at a maximum of 10% through the IRPF, capital gains exempt after 12 years, and no wealth tax.
| Indicator | ★ Andorra | Spain | Portugal | Monaco |
|---|---|---|---|---|
| Taxation of Rental Income | Income Tax (IRPF) ≤ 10% | Tax bracket up to 47% | Tax bracket up to 48% | 0% (non-French) |
| Capital Gains on Real Estate | 0% after 12 years | 19 to 28% (residents) | 28% (IFICI residents) | 0% (residents) |
| ITP / Transfer Fees | 1% state and local | 6 to 10 percent, depending on the region | ~6% (BMI) | At least 6% |
| Wealth tax | None | 0.2 to 3.5% (IP) | None | None |
| Inheritance tax for direct descendants | None | Varies by region | 0% (direct line) | None (residents) |
| Prior Authorization for Foreign Buyers | Mandatory (Law 5/2025) | No (EU) | No (EU) | Mandatory Residency Application |
Sources: Law 5/2014 (Personal Income Tax), Law 31/2007 (Capital Gains), ITP Law (ITP), Law 3/2024 (Foreign Investment).
Foreign Real Estate Investment Authorization: The Essential Prerequisite
Article 8 of Law 5/2025 provides that “foreign real estate investment in the Principality of Andorra always requires prior administrative authorization.” This authorization is issued by the ministry responsible for foreign investment. It is a prerequisite for the legal validity of the acquisition: a deed signed without prior authorization is null and void.
Who is affected?
Any non-resident national wishing to purchase real estate in Andorra. The only exceptions are purchases resulting from inheritance or the liquidation of a matrimonial regime—which are still subject to declaration with the Foreign Investment Registry but do not require prior authorization (Law 5/2025, Art. 8.2).
Acquisition Limits for Foreign Individuals (Art. 9)
Law 5/2025 specifically sets out what a foreign investor may acquire: at most one lot on which a single-family home is built, or a single-family home, two apartments, or two studio apartments, along with their ancillary facilities (up to three parking spaces and three storage units per apartment). Additional purchases exceeding these limits are subject to a 10% tax rate (versus 6%) and are subject to specific conditions.
The Authorization Process
The application is filed electronically with the ministry using the official form, accompanied by the required supporting documentation. The Foreign Investment Registry verifies, among other things, that the transaction does not pose a risk to public order, national security, or the housing market (Law 5/2025, Art. 5). Once authorization is obtained, the investment must be made within the time limit specified in the authorization or, failing that, within six months —otherwise, the authorization will lapse (Art. 11).
| Part of the IEA file | Requirement |
|---|---|
| Passport or ID card | Currently valid |
| Criminal Record Extract | Issued within the last 3 months, with an apostille |
| Proof of the Source of Funds | Required — Origin and Traceability |
| Official Foreign Investment Form | Electronic Filing |
| Property Description and Transaction Price | With provisional notarized documents |
| Processing time | 4 to 8 weeks (complete application) |
Taxes on the Purchase: ITP, Foreign Investment Tax, and Capital Gains
Contrary to what some sources suggest, property acquisition costs in Andorra are not limited to the ITP. Since 2024, a specific tax on foreign real estate investment (separate from the ITP) has applied to any purchase made by a non-resident.
The Inheritance Tax (ITP)
The state ITP rate is set at 1% of the actual transaction price (ITP Law, Art. 8.1). A municipal rate is added to this—ranging from 0.5% to 3%, depending on the regulations of each municipality (Law 36/2021, Art. 41). The state rate is reduced to zero for buyers who intend to use the property for residential rental for at least five years.
Tax on Foreign Real Estate Investments (Law 3/2024)
Law 3/2024 established a specific tax, separate from the ITP, applicable to any real estate purchase by a foreign investor:
- 6% of the actual value of the investment for a first-time purchase within the legal limits (a single-family home or an apartment/studio with annexes — Art. 8.a)
- 10% for acquisitions exceeding these limits, or when ownership is not maintained in accordance with the conditions set forth in Article 4(g) (Art. 8(b))
The 10% rate is applied gradually and in stages based on the total number of real estate units acquired since the law took effect.
Taxation of Capital Gains on Resale
Andorra has a capital gains tax on real estate (Impost sobre les Plusvàlues en les Transmissions Patrimonials Immobiliàries) with a sharply declining rate based on the length of ownership, as defined by Llei 31/2007:
| Length of detention | Capital Gain Rate |
|---|---|
| Less than 1 year | 15% |
| 1 to 2 years | 13% |
| 2 to 3 years | 10% |
| 3 to 4 years | 9% |
| 4 to 5 years | 8% |
| 5 to 6 years | 7% |
| 6 to 7 years old | 6% |
| 7 to 8 years old | 5% |
| Ages 8 to 9 | 4% |
| 9 to 10 years old | 3% |
| Ages 10 to 11 | 2% |
| Ages 11–12 | 1% |
| Over 12 years | 0% — Full exemption |
Source: Law 31/2007, Art. 12, as amended.
Summary of Acquisition Costs for a Foreign Buyer
| Cost Center | Estimated amount | Legal Basis |
|---|---|---|
| Tax on Foreign Real Estate Investments | 6% (first property) / 10% (additional properties) | Law 3/2024, Art. 8 |
| State ITP | 1% of the price | ITP Act, Art. 8.1 |
| Municipal ITP | 0.5 to 3 percent, depending on the parish | Law 36/2021, Art. 41 |
| Notary fees | ~1% of the price | Andorran Notary Fees |
| Attorney/Consultant Fees | 1 to 2%, depending on complexity | Variable |
| Registration Fees | Low | — |
| Estimated total | 7 to 12% of the purchase price | — |
The Market by Municipality: Prices, Yields, and Buyer Profiles
Andorra is divided into seven parishes, each with its own distinct characteristics. The choice of parish directly influences price levels, rental demand, and the suitability of the purchase based on your objective—whether it’s a primary residence, a rental investment, or meeting the wealth management requirements associated with a passive residence.
Andorra la Vella & Escaldes
4,800–10,000 €/m²Urban center, concentrated amenities, luxury residential developments. Strong annual rental demand, driven by permanent residents and expatriates. Ideal as a primary residence or a long-term investment.
La Massana & Pal-Arinsal
4,200–7,500 €/m²Direct access to the Pal-Arinsal ski area. Ideal as a primary residence or for seasonal rental. Strong winter rental potential with a tourism license. Quiet towns that are highly sought after by families.
Canillo, El Tarter, and Soldeu
4,200–8,000 €/m²Direct access to Grandvalira, the largest ski area in the Pyrenees. Estimated gross seasonal rental yield of 5–7%. Ideal for investors looking to combine a vacation home with rental income.
Ordino & Arcalís
3,800–6,000 €/m²The best-preserved parish, prized for its tranquility and natural landscapes. The Domaine d’Arcalís is not heavily frequented. It appeals to residents seeking quality of life and natural spaces, and is less susceptible to real estate speculation.
Encamp & Sant Julià
3,500–5,500 €/m²The most affordable entry-level properties on the Andorran market. Encamp has a direct gondola to Grandvalira. Sant Julià borders Spain. Ideal for first-time buyers or as a second home.
Nadia, a Belgian wealth investor: buying property in Andorra as part of a passive residency program
Nadia, a 44-year-old Belgian business owner who manages several investments across Europe, wanted to obtain passive residency in Andorra to optimize her tax situation (income tax ≤ 10%, no wealth tax) while building a real estate portfolio in the Principality. Her goal was to meet the local investment requirement and generate rental income.
Engage assisted her in choosing the acquisition structure (a sole proprietorship versus an Andorran limited liability company), preparing the foreign investment authorization application, and verifying the source of funds for Andorran banks. The selected apartment in Escaldes-Engordany (€620,000, 3 bedrooms, panoramic view) received approval within 6 weeks. The application for passive residency was filed concurrently with the signing of the deed.
“What surprised me was how rigorous the Andorran process is: every step is clearly defined, deadlines are met, and there are no hidden fees that pop up along the way. Engage coordinated the entire process; I only had to sign once.”
The Step-by-Step Acquisition Process: The 7 Steps
Defining the Acquisition Strategy
Before searching for a property, determine the optimal structure for the purchase: whether to use your own name or an Andorran company (SL), whether the property is for rental or residential use, and whether it is linked to an ongoing application for passive residency. This choice determines the tax structure of the transaction and the required documentation.
Property Selection and Negotiation
Identify the property through a local real estate agency (Lucas Fox Andorra, Andorra Sotheby’s, RS Thomas Real Estate). Verify the title, maintenance fees, and the existence of a tourism license, if applicable. Sign a reservation agreement with a deposit of 10% of the purchase price.
Preparation and Submission of the AIE Application
Preparation of the foreign investment authorization application: passport, apostilled criminal record issued within the last 3 months, official form, proof of the source of funds. Electronic submission to the relevant ministry. Processing time: 4 to 8 weeks for a complete application.
Opening an Andorran Bank Account
A prerequisite for the transaction. Andorran banks (Creand, Andbank, MoraBanc) conduct rigorous due diligence on the source of funds. Prepare a complete file documenting the traceability of the funds. Timeframe: 4 to 8 weeks.
Payment of Foreign Investment Tax
Before signing the notarized deed, make the payment on account of the foreign real estate investment tax (6% or 10%, depending on the circumstances). This payment is a prerequisite for the formalization of the deed (Law 3/2024, Art. 12, and Decree 142/2025).
Signing of the notarized document
Signing of the notarized deed of sale before an Andorran notary. The notary verifies the validity of the foreign investment authorization: without a valid authorization, the deed cannot be signed (Llei ITP, Art. 2). Payment of the balance of the purchase price and taxes.
Registration in the Property Registry
Filing of the deed with the Andorran Property Registry to make it enforceable against third parties. Registration of the transaction with the Foreign Investment Registry. Deadline for full completion of the investment: comply with the deadline specified in the authorization or, failing that, 6 months (Law 5/2025, Art. 11).
Backward Planning: How to Schedule Your Acquisition Over Time
Purchasing real estate in Andorra involves mandatory timeframes related to administrative and banking procedures. Planning ahead is essential, particularly for those who are coordinating the purchase with an application for passive residency.
Mistakes to Avoid at All Costs
Signing an agreement before obtaining foreign investment authorization
Prior authorization is a condition for the validity of the purchase, not a formality to be completed after signing. A deed signed without authorization is null and void (ITP Law, Art. 2, and Law 5/2025, Art. 8). Some sellers in a hurry may pressure you to sign early: never give in.
Neglecting the traceability of funds for Andorran banks
Andorran banks (Creand, Andbank, MoraBanc) conduct rigorous due diligence on the source of funds. An incomplete application can delay account opening for several weeks, jeopardizing the 6-month deadline for making the investment after authorization.
Confusing ITP with the foreign investment tax
Since 2024, two separate taxes have applied to property purchases by foreign nationals: the ITP (1% state and local) and the foreign real estate investment tax (6% or 10%). Be sure not to confuse these when calculating the total cost. Estimating the cost based solely on “notary fees” is a common mistake.
Exceeding the legal limits on acquisitions without prior approval
Law 5/2025 imposes restrictions on foreign purchases: for more than one single-family home or two apartments with their annexes, the investment tax rate increases to 10%, and specific conditions apply. Plan the purchase structure accordingly.
Allow the investment authorization to expire
The authorization expires if the investment is not made within the specified time frame (or 6 months by default, according to Law 5/2025, Art. 11). A one-time extension is possible but subject to regulatory conditions. Plan ahead for all banking and notary procedures to meet this deadline.
We assist foreign buyers of all backgrounds with their real estate investments in Andorra: from defining the acquisition strategy to signing the notarial deed, including the foreign investment authorization application, opening a bank account, and tax planning. Our approach: to eliminate areas of uncertainty early on, so that the transaction proceeds exactly as planned.
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Schedule an appointment with an expertFAQ — Buying Real Estate in Andorra in 2026
Can a foreigner freely purchase real estate in Andorra?
Yes, but not unconditionally. Any foreign buyer must obtain prior administrative authorization from the ministry responsible for foreign investment before signing any deed (Law 5/2025, Art. 8). This authorization is a condition for the validity of the purchase. In addition, limits apply to the number of real estate units that may be acquired: in principle, one single-family home, or two apartments or studios with their annexes.
How much does it really cost for a foreigner to buy real estate in Andorra?
The budget for closing costs generally ranges from 7% to 12% of the purchase price. It includes the foreign real estate investment tax (6% for a first property within the legal limits, 10% above that, according to Llei 3/2024), the 1% state property transfer tax (ITP) (Llei ITP, Art. 8), the municipal property transfer tax rate (0.5% to 3%, depending on the municipality), notary fees (~1%), and advisory fees (1% to 2%).
Is it possible to buy real estate in Andorra through a company?
Yes. Acquisition through an Andorran company (SL) is a viable option that may offer advantages in terms of estate planning and tax optimization. It is also subject to foreign investment authorization if the shareholders are foreign nationals. The “vinculación” rules (Law 3/2024, Art. 8.3) apply to prevent arrangements designed to circumvent acquisition limits. Prior legal advice is essential.
Can Andorran real estate serve as an investment for a passive house?
Yes. Purchasing real estate in Andorra is one way to meet the investment requirement for passive residency (a minimum investment of €400,000 through the Fonds d’Habitatge, or €1,000,000 in direct investment). Purchasing Andorran real estate can thus serve two purposes simultaneously: establishing a permanent home in the Principality and meeting the asset requirement for passive residency.
Is there a capital gains tax on the resale of real estate in Andorra?
Yes, but it is very advantageous over the long term. The rate decreases depending on the length of ownership: 15% for a resale within one year, gradually decreasing to 0% after 12 years of ownership (Law 31/2007, Art. 12). It is one of the most favorable real estate capital gains regimes in Europe for long-term investors.
How long does the entire acquisition process take?
In practice, it takes 3 to 5 months from the selection of the property to the signing of the notarial deed: 4 to 8 weeks for the foreign investment authorization (complete application), 4 to 8 weeks to open a bank account, and 1 to 2 weeks for notarial coordination. It is strongly recommended to plan ahead with at least 4 months of preparation, especially if the purchase is coordinated with an application for passive residency.
Is rental income from a property in Andorra taxed in Andorra?
For an Andorran tax resident, rental income is included in the income tax base and taxed at a progressive rate capped at 10% (Law 5/2014). For non-residents, a non-resident income tax applies. In both cases, the applicable tax treaty (specifically the 2022 France-Andorra tax treaty for French nationals) determines the tax treatment of income from Andorran sources.
