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Immigration
June 1, 2026
Real estate investment in Andorra attracts more and more French and European investors every year. And for good reason: the Principality offers some of the most favorable real estate tax rates in Europe, a structurally growing market, solid rental yields, and an exceptional quality of life in the heart of the Pyrenees.
But beyond the well-known advantages—no property tax, no inheritance tax, and a 4.5% IGI—investing in real estate in Andorra raises some practical questions: What steps must a foreign buyer take? Is it better to buy in one’s own name or through an Andorran company? And how can one take advantage of the France-Andorra tax treaty?
This comprehensive guide answers all these questions, from your first steps in the market through to signing the contract at the notary’s office, including strategies for estate planning.
Why Invest in Real Estate in Andorra? The Key Benefits
A property tax system unlike any other in Europe
Andorra stands out for its tax environment, which is particularly favorable to real estate investors. Unlike France, Spain, or Monaco, the Principality does not levy property taxes, wealth taxes, or inheritance or gift taxes on transferred assets.
Here are the key tax benefits to keep in mind:
- No property tax: no annual tax on property ownership
- No IFI (real estate wealth tax): large estates are not penalized
- No inheritance or gift taxes: unrestricted transfer of assets among heirs
- IGI (equivalent to VAT) at 4.5%: one of the lowest rates in Europe
- Income tax capped at 10%: rental income is taxed at a low rate
- Declining-scale capital gains tax: The IPV (capital gains tax) applies only if the property is sold within 10 years, with a rate that decreases based on the length of ownership
When purchasing a property, the closing costs also remain very competitive: 1% in notary fees based on the sale price, 4% in ITP (a government tax equivalent to transfer taxes), and up to 5% in real estate agent commissions.
A market experiencing structural growth
Since opening up to foreign investment in 2012, the Andorran real estate market has shown steady growth. The country’s mountainous terrain naturally limits new construction, creating a structural scarcity of supply that supports property appreciation in the medium and long term.
Demand, meanwhile, continues to grow: permanent residents, cross-border workers, tax exiles, retirees, and foreign investors are all vying for a limited housing stock. This tension between limited supply and sustained demand is the main driver behind the rise in the Andorran real estate market.
Competitive rental yields
The Andorran rental market offers net returns ranging from 4% to 6%, depending on the type of property and the parish—a very satisfactory level given the security and stability of the investment.
There are two segments:
Long-term rentals, driven by permanent residents, cross-border workers, and expatriates. This market is particularly tight in urban areas and offers stable, regular income.
The short-term rental market is very active thanks to mountain tourism (skiing in winter, hiking, and wellness in summer) and commercial events related to duty-free shopping. This segment can generate returns of over 6% on well-located properties, but requires a municipal tourism license. Please note: Foreign investors subject to the provisions of Law 5/2025 may not use their property for tourist accommodations or tourist lodging (HUT); this category is expressly excluded from the scope of authorized foreign investment.
Free consultation · 30 min
Book your free strategic consultation
.
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30 minutes to discuss your project in Andorra: tax matters, compliance, and setting up your business. Confidential and with no obligation.
Living in Andorra: Unparalleled Quality of Life and Safety
Beyond its tax system, Andorra attracts people with its quality of life: more than 280 days of sunshine a year, a pristine mountain environment, and one of the highest life expectancies in the world. The Principality is consistently ranked among the safest countries on the planet, with an extremely low crime rate.
Its location is also a major advantage: just a two-hour drive from Barcelona and Toulouse, Andorra la Vella is easily accessible for investors who wish to combine active wealth management with regular travel.
The Andorran Real Estate Market: An Overview
Price per square meter by parish
The Andorran real estate market is divided into seven parishes, each with its own market characteristics, supply, and buyer profile. Prices per square meter vary significantly from one area to another.
Note: These price ranges are approximate and may vary depending on the condition of the property, the floor level, the orientation, and the amenities.
Who can buy real estate in Andorra?
Requirements for foreign investors
Real estate investment in Andorra is open to both residents and non-residents, with no requirement to reside in the country to purchase property. The applicable legal framework is now Law 5/2025, dated March 6, 2025, which replaces Law 10/2012. The requirements are straightforward:
- Be of legal age (18 or older)
- Have a clean criminal record (with a Hague Apostille for foreign documents)
- Obtain government approval for foreign investment (described below)
Important: The authorization does not allow for an unlimited number of purchases. Law 5/2025 (Art. 9) sets strict quantitative limits for foreign investors who are non-residents or have been residents for less than 3 years: they may not own, in total, more than one of the following: a plot of land with a single-family home; or a single-family home, two apartments, or two studios (with their annexes: a maximum of 3 parking spaces and 3 storage units per unit); or six parking spaces. These limits apply for a period of 10 years from the date the limit is reached. After 3 years of actual and permanent residence, investors seeking Andorran citizenship are no longer subject to these restrictions on new acquisitions.
Government approval for foreign investment
Any real estate purchase by a foreign national is subject to authorization by the Andorran government. This process is relatively quick and does not require prior residence in the country. The authorization must be obtained within six months; after this period, it expires, unless a one-time extension is granted by the relevant ministry.
The following documents must be provided:
- Clean criminal record with a Hague Apostille
- Valid passport
- Certificate of Civil Status
- Original home purchase contracts
This authorization is distinct from the requirements related to residency (passive or active), which are governed by different rules. Andorran residents who cannot demonstrate three or more years of actual and permanent residency within the 10 years preceding their application (except for absences due to studies) are also subject to the foreign investment regime.
The process of buying real estate in Andorra: 5 steps
Buying real estate in Andorra follows a process governed by Andorran law. The entire process takes about two months and consists of five steps.
Step 1: Signing the reservation agreement
The buyer and seller sign a reservation agreement, accompanied by the payment of a deposit. This document formalizes the promise to purchase and reserves the property while administrative procedures are being completed.
Step 2: Application for Foreign Investment Authorization
The investor submits an application for authorization to the Andorran government along with the required documents. Obtaining this authorization is a condition precedent to the completion of the sale.
Step 3: Preparation of the deed of sale by the notary
There are only four official notaries in the Principality. One of them draws up the sales contract and prepares the signing, after verifying the title deeds and any encumbrances on the property.
Step 4: Signing the deed of sale
In the presence of the notary, the buyer and seller sign the deed of sale. The buyer pays the balance of the purchase price and officially becomes the owner of the property.
Step 5: Filing the deed with the Chamber of Notaries
The notary files the signed deed with the Chamber of Notaries to formalize and register the transaction. It is at this stage that the transfer of ownership becomes legally enforceable against third parties.
Free consultation · 30 min
Book your free strategic consultation
.
.
30 minutes to discuss your project in Andorra: tax matters, compliance, and setting up your business. Confidential and with no obligation.
Real Estate Taxation in Andorra: A Comprehensive Guide
Acquisition costs
Purchase costs in Andorra are particularly competitive compared to European standards. They consist of four main components: notary fees, set at 1% of the sale price; the ITP (equivalent to transfer tax) at 4% of the purchase value; and the real estate agent’s commission, which can be up to 5%, payable by either the seller or the buyer depending on the circumstances. For foreign investors subject to authorization, the IIEIA (Tax on Foreign Real Estate Investment) must be added, at a rate of 6% for a first purchase within legal limits, and 10% above that threshold. The total cost thus amounts to approximately 10% for an Andorran resident (excluding the IIEIA), and can reach 16% or more for a non-resident, compared to the 15–20% generally observed in France.
Capital Gains Tax (CGT)
If the property is resold within 10 years of purchase, capital gains are subject to tax. The government withholds 5% of the capital gain amount at the time of sale, pending verification that no administrative penalties apply and calculation of the final capital gains tax (a process taking 3 to 6 months). After 10 years of ownership, no capital gains tax is due.
The IIEIA, Tax on Foreign Real Estate Investment
Established by Law 3/2024, this tax applies to all foreign investors subject to authorization at the time of purchase and before the signing of the notarized deed. The rate is 6% for a first acquisition that complies with legal limits (a single-family home or an apartment/studio with its annexes), and 10% for any acquisition exceeding these limits. This rate is progressive and applied in tiers: once the 10% rate is reached, all subsequent acquisitions are taxed at the maximum rate, regardless of their nature. Exemptions apply, in particular, to acquisitions through inheritance, dissolution of the matrimonial regime, or for investments intended for the development of a commercial activity under strict conditions.
Rental income
Rental income received in Andorra is subject to Andorran personal income tax at a maximum rate of 10%, with a 0% tax bracket for the first portion of income. For a French investor, the application of the France-Andorra tax treaty determines in which country this income is taxed.
No recurring holding tax
Unlike France, where property tax represents a significant annual expense, Andorra does not levy any recurring taxes on property ownership. This absence of annual expenses automatically improves the net return on any rental investment.
The Emphyteutic Lease (Encamp) System
A unique feature of the parish of Encamp is that certain properties are available under the long-term leasehold system: the buyer gains full use of a property owned by another party in exchange for the regular payment of a fee. This arrangement allows for home ownership with a lower initial investment.
Frequently Asked Questions About Real Estate Investment in Andorra
Can a foreigner buy real estate in Andorra without residing in the country?
Yes. Non-residents may purchase real estate in Andorra, provided they obtain government authorization for foreign investment. As provided for in Law 5/2025 (which replaces Law 10/2012), this authorization is subject to strict quantitative limits and must be finalized within six months.
What costs should you expect when buying a property in Andorra?
For an Andorran resident: approximately 10% of the sale price (1% notary fees, 4% property transfer tax, up to 5% real estate agency fees). For a foreign investor subject to authorization: the IIEIA must be added at a rate of 6% (first purchase within legal limits) or 10% (beyond that), bringing the total cost to approximately 16% or more.
Is there a property tax in Andorra?
No. Andorra does not levy any annual property tax on real estate held within its territory.
Do you have to pay capital gains tax when you sell?
Yes, if the property is sold within 10 years of purchase. In that case, the capital gains tax (IPV) applies, with a 5% withholding tax at the time of sale while the audit is ongoing. If the property has been held for more than 10 years, no capital gains tax is due.
Is it possible to finance a real estate purchase in Andorra with a bank loan?
Yes. Andorran banks offer mortgages to non-residents, typically requiring a down payment of 30% to 40%.
What is the average rental yield in Andorra?
Between 4% and 6% net, depending on the type of property and the municipality, or even higher for well-located seasonal properties (near ski resorts). Please note: Foreign investors subject to the provisions of Law 5/2025 may not use their properties for tourist accommodations or HUTs.
