Introduction
Passive residency in Andorra: the Government has raised the minimum real estate investment threshold to €800,000 to access this type of permit. This change affects those planning to move to the Principality by purchasing a property as a way to obtain passive residency in Andorra and influences decisions regarding investment, taxation, and migration planning.
Summary of the Main Changes
In the announced reform, the most relevant updates are:
- The minimum investment for property purchase increases from €600,000 to €800,000 for passive residency in Andorra.
- The financial deposit option remains at €600,000.
- For self-employed individuals and entrepreneurs, part of the deposit (€30,000 of the €50,000) becomes a non-refundable contribution.
- Passive residents will pay half of the current tax per dependent (approximately €6,000 per dependent, according to the announcement), as a non-refundable contribution.
These changes aim to curb pressure on the real estate market and guide demand towards financial deposits or high-end properties.
Why does the limit increase and what is the Government aiming for?
The increase to €800,000 responds to three clear objectives: reducing the number of applications for property purchase, relieving the residential market, and focusing transactions on higher-value properties. By tightening the investment requirement for passive residency in Andorra, the Government seeks to preserve more housing for the local population and limit the entry of residents without employment or business activities.
Impact on the real estate market
As the minimum requirement for passive residency in Andorra rises, it is expected:
- Fewer foreign buyers in the mid-range (€600,000–€800,000), as the entry barrier heightens.
- Greater interest in financial deposits that yield returns for the State.
- Possible stabilization of demand in the medium housing segments, potentially facilitating access for resident buyers.
Alternatives to Buying: Deposit and Other Avenues
If you are considering passive residency in Andorra, keep in mind that the option of making a financial deposit of €600,000 remains available. This approach may be simpler for those not wishing to manage a property and also offers the advantage that the State earns interest, supporting the government’s strategy to decongest the real estate market.
In addition to the deposit and purchase, other options to reside in Andorra include active or work residence permits, whether employed or self-employed. For those planning to start a business or establish an activity, review the new initial deposit conditions, including the fact that part of it will be non-refundable.
What to Review if You Had Moving Plans
Before finalizing a process to obtain passive residence in Andorra, it is advisable to:
- Verify that the property price meets the new threshold of €800,000.
- Consider the alternative of a €600,000 deposit if you prefer not to buy real estate.
- Review the extra costs for dependents: the non-refundable contribution per dependent increases and impacts your total budget.
- Consult a tax advisor to understand tax and wealth implications.
For practical guidance on taxes and residence, at Andorraway we have prepared helpful resources on residence in Andorra and taxation in Andorra, which will help you estimate costs and choose the most suitable option.
Additional Costs and Example Calculation
Besides the amount required for passive residence in Andorra, you should consider:
- Taxes related to acquisition (if you opt for purchase).
- Notarial and registration fees.
- Contributions to dependents as a non-refundable amount under the new regulation.
- Cost of living and services (healthcare, education, housing).
Indicative example: if you plan to move with a partner and a dependent, and choose to buy a property at the new minimum, your initial outlay will be the property price (≥ €800,000) plus taxes and the contribution for the dependent (as stated by the Government). To understand the cost of living in Andorra, consult Cost of living in Andorra for updated details.
Practical Tips Before Deciding
If you are interested in passive residence in Andorra, follow these recommended steps:
- Perform an economic simulation including investment, taxes, and non-refundable contributions.
- Compare purchasing a property (minimum €800,000) versus a €600,000 deposit.
- Contact experts for moving and homologation procedures to assess logistics and timelines; for example, review processes at moving to Andorra and exchanging your license if applicable.
- Assess healthcare and education: consult healthcare system and education for your family.
- If you need advice, request professional contact through Andorraway.
Impact for Entrepreneurs and Self-Employed
The reform states that, for those applying for residence and work as self-employed, €30,000 of the €50,000 deposit will be non-refundable. This increases the actual setup cost and is a key factor for planning project viability before moving. If you are a business owner, also review tax implications and administrative requirements to create a company in Andorra.
Frequently Asked Questions (FAQ)
Is it still possible to obtain passive residence in Andorra through a deposit?
Yes. The financial deposit remains at €600,000, making it an especially attractive alternative to the property market if you prefer not to participate in real estate purchase.
What if I already had an open file with a €600,000 investment?
The transition details are usually published in the applicable regulations; if you have an ongoing case, it is advisable to confirm with authorities or your legal advisor whether the old or new rule applies. Contact recommended professionals at Andorraway for assistance.
How does this affect personal taxation?
Residency has tax consequences depending on income, assets, and activity. To understand how passive residence in Andorra will affect you fiscally, review our resources on taxes in Andorra: Taxes in Andorra.
Conclusion and Next Steps
The increase to €800,000 for passive residence in Andorra changes the landscape for many investors and future residents. If you are considering moving, carefully evaluate the deposit alternative, consider the actual economic impact (including contributions for dependents), and seek professional advice before signing any agreement.
If you need practical help to plan your move, from residence procedures to moving management, at Andorraway we can guide you: visit Living in Andorra and contact us for a personalized consultation.
Passive residence in Andorra: get informed, compare options, and plan ahead to make the best decision for you and your family.