Why invest in real estate in Andorra?
Before you invest in real estate property in Andorra, Molines Patrimonis would like to talk about all the advantages that such investment will entail for you.
Reasons for investing in real estate in Andorra
Investing in Andorra has a lot of advantages. Our country is located in the Pyrenees mountains between France and Spain. Our natural setting with its breathtaking landscapes makes Andorra a highly acknowledged and attractive tourist destination. The Principality of Andorra, however, is also a very attractive country in terms of its tax regulations.
Andorra, an attractive country for several different reasons
The Andorran tax system is not our country’s only advantage. We have a high quality of life and exceptional standards of safety. Below we present a list of reasons that make Andorra a very desirable destination:
- low delinquency and violent crime rate (0 violent crimes in 2016)
- free education system
- 36% of the national territory is classified as Protected Natural Areas
- over 2,000 hours/300 days of sunshine yearly
- excellent air and water quality
- the 4th healthiest country worldwide
- 3rd leading country worldwide in implementation of electric vehicles
Andorra offers numerous assurances for foreign investments thanks to the large number of international agreements which it has signed:
- association agreement with the European Union (under negotiation)
- International Financial Transparency Agreement with the OECD
- agreements for avoiding double taxation with France, Spain, Luxembourg, Liechtenstein, Portugal, United Arab Emirates, and Malta
Tourism in Andorra
Located between France and Spain, the Principality of Andorra lies in the heart of the Pyrenees mountains. Our country offers breathtaking landscapes but it also has outstanding facilities and infrastructures. We are visited by large numbers of tourists both in the summer and the winter. In 2016, eight million people visited Andorra, with a density of 17,000 visitors per km2.
Andorra also possesses a splendid cultural, historical and natural heritage that draws steadily increasing numbers of tourists.
- 2 ski resorts which stand among the Top 15 most visited ski resorts worldwide.
- Over 2 million ski passes sold, and over 300 km of slopes
- Two outstanding thermal-recreational centres: Caldea and Inúu (385,000 visitors in 2016)
- 1 valley listed as a World Heritage Site by UNESCO: the Madriu-Perafita-Claror valley
- 1 adventure park focused on nature: Naturlandia (183,000 visitors in 2016)
- A total of some 50 Romanesque churches (11th and 12th centuries).
Andorra’s tax framework in a nutshell
Andorra has established a tax framework conceived to favour foreign investments.
- Since 2009, exchange of tax information with the OECD
- Approval and application of a new and complete tax framework
- Corporations Tax (IS): 10%
- Personal Income Tax (IRPF): 10%
- Non-resident Income Tax (IRNR): 10%
- IGI (equivalent to VAT): 4.5%
What’s more, in 2012 Andorra passed a law opening the country to foreign investment capital:
- Foreign investors can own 100% of the capital of an Andorran company
- The foreign investment application process has been reduced to 1 month
- The economic rights of residents are steadily increasing
- Residents can exercise a liberal profession
Documents required to purchase real estate
Below we present the terms and necessary documents for purchasing a property in Andorra.
Authorization of the Andorran government to purchase real estate
In order to invest in a property in the Principality, an investment authorization must be obtained from the Andorran government.
Whatever your project may be, this valuable authorization is the first step to investing in our country.
The authorization allows you to invest in any of Andorra’s seven municipalities: Ordino, La Massana, Canillo, Encamp, Escaldes-Engordany, Sant Julià de Lória or the capital, Andorra la Vella. There is a wide range of properties from which to choose:
- Single-family homes
- Parking places
- Business premises
Other terms and necessary documents
Aside from the prior authorization, in order to invest in Andorra it is necessary to comply with a set of requirements and to submit various documents.
Interested investors should:
- be of legal age (at least 18 years old)
- not have a criminal record and provide proof of this
- invest at least 400,000€
- deposit a surety of 30,000€ plus 7,000€ for each member of the family
- prove that they have the necessary financial resources, that is to say, as a minimum an income that is at least 4 times higher than the average wage in Andorra
- reside more than 90 days a year in Andorra
- have a passport and a certificate of marital status
- possess originals of the respective purchase or lease contracts of their dwelling
- possess some document certifying disability, retirement or illness
- provide a medical certificate (issued by an Andorran physician)
- possess a title of ownership or a bank guarantee to prove that they can cover their needs
Important! In Andorra, all supporting documents issued by foreign countries should bear an apostille.
Formalities for making your investment in the Principality of Andorra
If you want to invest in a property in Andorra, you will have to carry out a set of formalities once you have all the necessary documents on hand. These formalities represent four main stages in the investment process and we list them for you below.
Stages in the purchase of a house or an apartment in Andorra
Once the required authorizations have been obtained, it takes between a month and a half and two months to complete the purchasing process. The following are the four main stages involved in purchasing a property:
- Signing of the reservation contract on the property between the buyer and the seller. The buyer pays a deposit that makes the purchase option effective and the seller withdraws the property from the market for a specific period of time.
- Preparation and handling of the deed of purchase and sale: the sales process is activated by one of the four Andorran notaries, a contract is drafted and the preparations are made for the signing of the deed.
- Signing of the deed of purchase and sale by the buyer and the seller in the presence of the notary. The buyer pays the outstanding balance and takes possession of the property.
- Deposit of the deed of purchase and sale by the notary.
In Andorra foreign nationals may invest in properties including houses, apartments, single-family homes and parking places, among other types of real estate. Since 2012 the laws on the purchase of real estate have been substantially liberalized for both residents and non-residents.
Notary expenses and other charges
List of notaries in Andorra
In Andorra, the notary is the only person qualified to register purchase and sale transactions. There are four notaries in the Principality:
- Notary Office of Isidre Bartumeu Martinez: C. Prat de la Creu, 36, Andorra la Vella. Tel: + 376 801 000
- Estañol Notary Office: Av. del Consell d’Europa, 13, Andorra la Vella. Tel: + 376 801 280
- Notary Office of Rosa Ferrandiz: Bda. del Moli, 9, 1-5a, Andorra la Vella. Tel: + 376 802 66
- Notary Office of Rodriguez Miñana, Joan Carlos: Av. Carlemany, 105, 5-3, Escaldes-Engordany. Tel: + 376 890 030
Expenses for the purchase of a property
Since 2012, thanks to our country’s flexible tax system and the opening of our economy, Andorra is an excellent place to invest in real estate. Below we list the notary expenses and the other expenses involved in the purchase of a property:
- Andorran law sets the notary expenses at 1% of the sales price of the property concerned.
- The Capital Transfer Tax (ITP) is 4% of the total purchase value of the property. This tax is paid before an Andorran notary in the act of signing the deed of purchase and sale by means of a bank cheque made payable to the Andorran government.
- The seller takes charge of the fees of the real estate agency, which are usually between 5 and 10% of the sales price.
- The buyer should pay the sales price within 5 days previous to the final signature before the Andorran notary.
This, in short, is all you need to know about making real estate investments in the Principality of Andorra. If you are interested in investing in a property in our country, please do not hesitate to get in touch with Molines Patrimonis.