Ilustración anime minimalista de un edificio residencial en las montañas de Andorra con picos nevados al fondo. Un pequeño cartel infográfico muestra aumentos de porcentajes (3%→6%, 5%→10%). Predominan los tonos azules y grises con detalles amarillos para las cifras, sin rostros ni personas.

Foreign Investment Tax in Andorra: How the Increase Affects Home Purchases and Relocators

Introduction

Foreign investment tax in Andorra: the 2026 budget draft includes an unexpected increase in revenue tied to higher rates on property purchases. The foreign investment tax in Andorra, launched in 2024, now plays a central role in projections: anticipated revenue jumps from €9.3 million to €22.2 million, a 112% increase driven by doubling the rates in the legislative draft.

What changes does the bill include and why does it matter

The expected increase in the foreign investment tax in Andorra implies that, unless there are parliamentary changes, the rates will rise to 6% for first-time property buyers (previously 3%) and 10% for additional acquisitions (previously 5%).

These measures increase the purchase costs for investors and non-resident buyers and directly affect demand and decision-making for those planning to move to Andorra or invest in real estate. The foreign investment tax in Andorra has become a key factor in assessing the financial viability of relocating or investing in property.

Key budget data for 2026

In addition to the impact of the foreign investment tax, the budget draft includes other relevant projections:

  • General Indirect Tax (GIT): forecast of €181.4 million, up 10% due to positive economic activity.
  • Consumption taxes (tobacco): expected decrease of 17%, to €95 million.
  • Excise taxes: around €49.3 million, including €10.7 million from the CO2 emission tax.
  • Tourist tax: forecasted at €6.9 million for 2026 (below the initial estimate of €12 million).
  • Asset revenues (12% of total): mainly from FEDA (€9.8 million) and Andorra Telecom (€27.4 million).
  • Projected direct taxation revenues: €366.3 million, a 2% increase from the current budget.

Direct impact on buyers and investors

If you are considering purchasing property in Andorra or investing in the real estate market, the foreign investment tax in Andorra changes the equation. Here are the main practical consequences:

  • Increased initial purchase cost: the rate hike raises the needed liquidity at signing.
  • Potential effect on prices: sellers might pass some costs onto the final price, or demand might adjust accordingly.
  • Timing decisions: completing a transaction before new rates take effect could lead to savings.
  • Greater importance of tax and legal planning when relocating or setting up structures for foreign investment.

Tips for those planning to move or invest

To minimize risks and optimize costs related to the foreign investment tax in Andorra, consider a practical checklist:

  • Review legislative calendar and, if possible, accelerate purchase decisions before changes are finalized.
  • Consult with a tax advisor specialized in Andorra to explore exemptions, credits, or legal alternatives.
  • Consider alternatives to direct purchase (such as medium-term renting or corporate structures) depending on your goals: residence, investment, or business.
  • Calculate the total moving costs: taxes, setup expenses, services, and adaptation. In Andorraway: moving to Andorra you can find services to help plan this.

How it influences residence decisions

The foreign investment tax in Andorra affects the cost of housing access but does not, on its own, diminish the country’s attractiveness for fiscal residence. Factors to consider include:

  • Overall tax advantages: personal taxation regime, limits on taxation, and comparisons with other countries. Review information about residency in Andorra.
  • Recurring costs: GIT, services, insurance, and healthcare expenses. See healthcare system in Andorra and cost of living.
  • Concrete impact on families or those needing property as a residency requirement.

Other budget items affecting everyday life

The draft also reveals increased public spending impacting quality of life in Andorra: for example, the Saas (Servei Andorrà d’Atenció Sanitària) raises salaries to €72.2 million — almost €9.7 million more — due to new agreements and personnel hiring, with 35.2 new positions planned (including 8.25 for doctors).

Meanwhile, cuts are made to grants like Renova (rehabilitation) and Engega (efficient mobility), but funds for public transport and airline subsidies are increased, potentially improving connectivity and public transport usage.

Summary of benefits and risks

  • Benefits: increased revenue enables funding of public services, health investments, and transportation; macroeconomic stability.
  • Risks: higher costs for non-resident property purchases, possible moderation in tourism or investment demand in certain segments.

Conclusion and next steps

The foreign investment tax in Andorra is no longer a minor variable: its projected increase for 2026 alters planning for buyers and movers. If you’re considering relocating, starting a business, or investing in real estate, it is advisable to:

  • Contact experienced tax and legal advisors familiar with Andorra.
  • Review the timing of your purchase or investment decisions.
  • Check practical resources on taxes and residency in Andorra at sites like taxes in Andorra and living in Andorra.
  • If you need direct assistance, request guidance through contact.

In summary, the announced increase in revenue and especially the doubling of foreign investment tax rates in Andorra compel recalculations of costs and strategies. Planning ahead and seeking proper advice will be key to optimizing any real estate or relocation process.