Andorra

The co-Principality of Andorra is a small but striking, land-locked country located in the eastern Pyrenees, between France and Spain. It boasts the highest capital city in Europe, Andorra la Vella, at 1,023 metres above sea level (3,356 ft).

Clean mountain air, low crime rate, attractive tax system, excellent health care and connectivity draws foreign residents and second homeowners mainly from France, Spain, Portugal but also the UK. Andorran nationals make up around 48% of the population. The well-known ski resorts, nature parks and duty free shopping make Andorra popular with tourists (over eight million visitors a year pre pandemic) enjoying winter sports and mountain pursuits. Local and tourist demand for accommodation creates opportunity for property investment too. Rental prices have increased. It is important to get good advice.

Currently there are minimal restrictions on foreign ownership of property, resident or non-resident. You must have a clean criminal record and must be of legal age. Non-residents will need to get authorisation from the Government, which takes a couple of weeks. Our affiliate partners are on hand to provide guidance and help.

A range of property exists in Andorra, but choice can be limited due to the size of this relatively small market. There has been an increase in the number of off plan, higher end developments available in recent years due to demand.

The purchase process can take four to six weeks from reservation to completion. Get your legal advisor in place early as the reservation contract can be binding. Allow around 5% to cover the main acquisition costs including notary fees and property transfer tax.

A wealthy country, there are low capital gains and no wealth or inheritance taxes. Capital Gains tax applies on property sales, largely to encourage stability and longevity of ownership. This works on a sliding scale from 15% of the sale price for up to one year of ownership, to 0% after 13 years.

Basic personal income tax for residents is favourable compared to other countries, with three tiers and basic rate at 10% over €40,000. There are deductions allowed, including mortgage interest. You are considered tax resident if you spend over 183 days a year in the country, or have your main economic or business interests here. Corporate tax is 10% on income. We are advised that the tax system is relatively straightforward, but do consult a qualified tax specialist.

There is a Residency by investment programme available, with a minimum investment of €400,000, which includes property. It requires a minimum of three months a year living in the country amongst other terms & conditions.

Non-residents pay 10% tax on any income earned in Andorra. Please do check figures for yourself, in case they change. As with many countries now the UK has third party status, be prepared for bureaucracy and additional paperwork. Our affiliate partners in Andorra are experienced in helping overseas buyers. Please do get in touch with us and we can connect you.

Photo credits © Marin Silva via canva.com