For decades, the Principality of Andorra was viewed as a straightforward, light-tax haven for global property investors. Tucked into the Pyrenees between France and Spain, its blend of a maximum 10% income tax, 0% wealth and inheritance tax, and premium mountain lifestyle made real estate an easy choice.
However, the landscape has fundamentally shifted. Driven by a severe local housing shortage and a strategic political turn toward selective exclusivity, the Andorran government has aggressively cracked down on foreign real estate speculation.
The primary vehicle for this change is the Omnibus Law (Llei del creixement sostenible i del dret a l'habitatge), which introduced a highly regulated framework for non-resident buyers.
If you are a non-resident looking to purchase property in Andorra, your intent, whether you are buying to relocate, to rent long term, or to hold as a second home, now dictates your tax liability.
1. Property purchase taxes: ITP vs IIEI
When a non-resident buys resale property in Andorra, two layers of transaction taxes apply: the standard transfer tax and the foreign investment tax.
The baseline: ITP (Impost sobre Transmissions Patrimonials)
ITP is Andorra's standard property transfer tax for resale properties. New builds instead trigger a 4.5% indirect tax (IGI). ITP is a flat 4% of the purchase price. The notary normally collects this tax at closing, and it is split between the national government (around 2%) and the local parish municipality (Comú, around 2%).
The non-resident multiplier: IIEI (Impost sobre les Inversions Estrangeres Immobiliàries)
Under Law 2/2026 (Omnibus II), in force from 13 February 2026, IIEI rates doubled. They apply to non-residents and residents who have lived in Andorra for less than three years.
Current IIEI rates by property count:
- 6% on the first qualifying property, including up to three parking spaces and storage units with that unit.
- 10% from the second property onward (or when investment limits for a first property are exceeded).
First non-resident purchase example at €500'000: 4% ITP (€20'000) + 6% IIEI (€30'000) = 10% combined transaction tax.
2. How purchase intent flips the tax picture
Andorra's new framework separates non-resident buyers into strict categories based on intended use of the property.
| Non-resident intent | Main tax and legal effect |
|---|---|
| Holiday home / vacant asset | Full IIEI (6% or 10%), vacant tax risk at €100/m² per year, and strict two-property cap under Omnibus rules. |
| Long-term rental | 90% IIEI bonus, with mandatory five-year lease framework and CPI rent adjustment limits. |
Case A: Pure holiday home (vacant asset)
If you buy property to use occasionally and leave it empty most of the year, you face the highest friction.
- Volume caps: non-residents are capped at one chalet or two apartments.
- Vacant housing tax: units left unoccupied for more than one year without clear justification can trigger around €100/m² per year.
Case B: Long-term rental with the 90% IIEI bonus
If your main goal is rental yield, the government offers a strong tax incentive with strict compliance conditions.
Under the Omnibus framework, a 90% bonus can apply to IIEI if the investor commits the property to the long-term rental market. On a €500'000 purchase, 6% IIEI (€30'000) drops to €3'000 after the rebate.
To preserve that benefit, current leasing rules include:
- Five-year mandate: minimum legal lease term extended from three years to five years.
- Renewal rights: tenants can obtain an automatic two-year extension when basic criteria are met.
- CPI rent caps: annual rent adjustments are linked to official CPI.
3. The exit trap: capital gains tax (IRNR)
If you plan to buy, renovate, and quickly resell as a non-resident, anti-speculation rates can materially reduce margins.
Non-resident sellers are subject to IRNR capital gains tax on real estate sales:
- 15% effective rate on gains realized within the first two years of ownership.
- 10% flat rate after two years.
Long-term naturalized residents can eventually reach 0% capital gains after very long holding periods. Non-residents remain in the 10% regime.
4. Buying to relocate: the 2026 residency shift
If your intent is relocation, current immigration updates materially changed both active and passive routes.
- Passive residency: total required investment now sits at €1'000'000. A reduced €400'000 route may apply when capital is invested directly in the state social housing fund.
- Active residency via company setup: entry bond around €50'000, with a transitional framework that can treat the payment as non-refundable.
- Catalan language requirement: first renewal now requires basic Catalan proficiency (A1 or A2).
Use the property calculator to model purchase costs in Andorra with ITP and IIEI assumptions, then request a consultation if you want to stress test your scenario.