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Foreign Investment Tax in Andorra: How the New Rules Affect Movers and Investors

Introduction

Foreign Investment Tax in Andorra is the phrase that summarizes the most significant measure of the new law bill promoted by the Government in 2025. The text tightens the levy on property purchases by non-residents, increases requirements for passive residencies, and modifies conditions for freelancers and seasonal workers. If you are thinking of moving, investing, or settling in Andorra, it is essential to understand what changes and how they might affect you.

Executive summary of the measures

The main innovations approved in the bill are summarized as:

  • Increase of the foreign investment tax: the levy rises to 6% on the first property and 10% on subsequent ones.
  • Raising the minimum investment for passive residencies from €600,000 to €800,000 and allowing investments in financial instruments or bank debt.
  • Tightening the deposit for freelancers: from the total required (€50,000), €30,000 must be non-refundable; for dependents, from €12,000, €6,000 must be non-refundable.
  • Creation of the residence permit for hiring abroad and changes in the seasonal worker regime (more controlled overtime hours and an additional inspector).
  • Extension of the sector change prohibition for non-EU workers from 3 to 5 years.
  • Authority for the Government to limit the opening of certain businesses that consume many human resources.

What exactly changes in the foreign investment tax

Before the change, the tax burden was typically 3% for the first asset purchased by a foreigner and 5% for the second, with a 10% in some circumstances. The new bill explicitly sets 6% for the first property and 10% for the following ones. This means that the Foreign Investment Tax in Andorra disappears from its “softer” range and raises the direct cost of buying property in the country.

Practical consequences:

  • Higher direct cost when buying a home as a non-resident: plan on 6% of the purchase price for the first property.
  • For investors with more than one property, the 10% rate may penalize property portfolio strategies.
  • Demand for foreign property may moderate and, in the medium term, curb sudden price increases, although it may also alter market dynamics.

Impact on passive residencies and self-employed professionals

The bill raises the minimum investment for obtaining a passive residence from €600,000 to €800,000 and also allows the use of financial instruments or debt issued by Andorran banks as part of the investment. Additionally, for freelancers or those seeking residence for activity, the deposit required at the AFA (€50,000) will have a portion of €30,000 non-refundable.

This makes financial planning and the choice between:

  • Passive residence (now with higher investment and stricter conditions)
  • Residence for professional or work activity (with increased deposits and pre-reservation system)

If your goal is to relocate to Andorra as an investor or professional, consider which type of permit best fits your project and how to finance the investment without compromising liquidity.

Immigration and labor market measures

The bill allows hiring abroad with a specific permit and extends the capacity of seasonal workers to perform extra hours (up to 12 hours weekly in another sector, 52 weeks maximum), always with controls and sanctions in case of non-compliance. Additionally, the sector change for non-EU workers extends from 3 to 5 years to foster job stability in highly qualified sectors.

For workers and companies, this implies:

  • Greater security for employers regarding talent retention in a sector.
  • Need to strictly comply with labor conditions to avoid sanctions and permit loss.

Practical tips if you are thinking of moving or investing

With the changes in the Foreign Investment Tax in Andorra and new residence requirements, we recommend:

  • Perform a complete calculation of the acquisition cost including the new tax (6% or 10%).
  • Evaluate residence alternatives: active (by work) vs. passive (investment). Review the differences in requirements and costs.
  • Consult with tax advisors and lawyers in Andorra before signing agreements.
  • If you plan to create a company or work independently, review the new AFA deposit and how it affects your business plan.
  • If you are seasonal or your company hires seasonal workers, ensure compliance with hours and requirements to avoid sanctions.

Quick checklist before buying or applying for residence

  • Total budget (price + taxes: include 6%/10% as applicable).
  • Financing plan to cover the minimum investment (€800,000 for passive residency).
  • Due diligence document and market study if investing in commerce or housing.
  • Tax advisory to study personal and potential company taxation.
  • Confirm residence permit conditions (deadlines, sector restrictions, employment requirements).

Useful resources and next steps

If you are considering moving to Andorra and want support to understand how these changes in the Foreign Investment Tax in Andorra affect you, at Andorraway we can help you with:

Conclusion

The new package of measures raises the bar for foreign investment and strengthens controls over residencies and temporary work. The Foreign Investment Tax in Andorra becomes more expensive, and conditions for passive residencies and freelancers tighten; however, new pathways (financial instruments, hiring abroad) can be leveraged with proper planning. If you plan to buy, invest, or move, prepare in advance and seek specialized advice to adapt your strategy to the new rules.

Would you like us to evaluate your case and assist you with relocating, residency, or tax planning in Andorra? Contact us: andorraway.com/contact