Buying property in Andorra: the foreign investment tax rises to 6%

What changed on 13 February 2026

Llei 2/2026 of 22 January 2026, published in BOPA No. 15 of 12 February 2026 and in force from the following day, amended Llei 3/2024, which created the foreign property investment tax (IEI). This tax is levied on a foreign investor who acquires a property or a right in property in Andorra, or shares in companies that hold such assets, or who carries out a property development.

6% or 10%: how is the rate applied?

The 6% rate applies to an investment within the limits of one home; everything else is taxed at 10%.

The rate applies in bands, according to the total number of properties, taking earlier investments into account. Related entities add their properties together.

Who has to pay the IEI? Non-residents and residents of less than 3 years

• non-resident individuals;
• residents who cannot show at least 3 years of actual and permanent residence in the preceding 10 years, periods of study abroad counting as residence;
• foreign legal entities;
• Andorran companies owned 50% or more by foreign capital, the shares of residents of less than 3 years being counted as foreign.

Exemptions and the 90% reduction

Three cases reduce or remove the tax:

• a 90% reduction if the property is let at an affordable rent, as a habitual and permanent residence, for at least 10 years; if the use changes before then, the reduction is clawed back with late-payment interest;
• an exemption for inheritances and for transfers free of charge between spouses, partners or relatives up to the second degree;
• an exemption for certain business investments unrelated to residential property, held for 10 years and creating jobs.

What does buying a €700,000 home cost a foreigner?

About €70,000 in taxes for an existing home bought from a private individual, and €73,500 for a new home sold by a developer (indicative calculation), excluding notary’s fees: the 6% IEI comes on top of property transfer tax or IGI.

Indicative calculation: rates applied to the purchase price, excluding notary’s fees and other professional fees. ITP combines 1% for the State and a comú share of 0.5 to 3%; practitioners use about 4%.

The IEI is paid before the purchase, as it is linked to the foreign investment authorisation: a payment on account, calculated on the amount declared in the application, is made before the favourable decision; the tax is then self-assessed and paid before the deed is signed, and the notary cannot authenticate the purchase without proof of payment or of exemption. The steps are detailed in our guide to foreign investment authorisation in Andorra.

Before the reform, a non-resident paid 3% IEI on a first home: on this property, their tax rises from €21,000 to €42,000 (indicative calculation). A resident who has been settled for less than 3 years, who was not subject to it, now pays it in full. Remember that a purchase gives no right to residency; for passive residency, only a property worth more than €800,000 counts towards the required investment. All the costs of a purchase are detailed in our guide to buying a flat in Andorra.

Transitional regime and points to check

The former rates still apply to investment authorisation applications filed before 22 January 2026, the date on which Llei 2/2026 was passed, and to purchases for which an earlier sale agreement is proven within six months. The IEI regulation was adapted by Decree 58/2026 of 25 February 2026.

The count of properties already held, the assessment of the 3 years of actual residence and the classification of ancillary properties (parking spaces, storage rooms) can change the applicable rate: have your case checked by a notary or a lawyer before signing. The subsequent loss of foreign investor status, for example after 3 years of residence, gives no right to a refund of the tax paid.