Andorra – Property Taxes

What taxes and fees apply when buying a property in Andorra?

When acquiring a resale property in Andorra, the principal tax is the Real Estate Transfer Tax, known locally as the ITPI or ITP (Impost de Transmissions Patrimonials Immobiliàries). This charge is levied at a combined rate of 4% of the property’s value, shared between the national government (approximately 1.75–2.5%) and the local municipality in which the property sits (approximately 1.5–2%). Payment is made to the notary at the point of completing the purchase deed. By European standards, this rate sits comfortably at the lower end, broadly comparable in function — though not in level — to stamp duty land tax in the UK or provincial transfer taxes in Canada.

Purchases of newly built properties attract IGI (Andorra’s consumption tax equivalent, Impost General Indirecte) at 4.5% rather than the ITPI transfer tax. This distinction between new builds and resale stock mirrors similar arrangements in Spain and France, where different tax mechanisms apply depending on the age of the property.

Notary fees are payable by the buyer, calculated on a degressive bracket scale linked to the purchase price. These typically amount to around 0.7–1% of the agreed value, which in practice translates to roughly €1,000 to €3,000 depending on the transaction’s value and complexity. The fees cover document preparation, verification of title, and the formal deed-signing ceremony. Under Andorran convention, it is exclusively the buyer who bears these costs.

Real estate agent commissions are generally borne by the seller at approximately 5%, so buyers do not typically pay agent fees. Separately engaging a lawyer is not standard practice in routine Andorran transactions, as the notary ordinarily acts for both parties — however, independent legal counsel is always advisable for non-residents who are unfamiliar with local procedures.

A meaningful additional cost was introduced from February 2024 onwards. Law 3/2024, of 1 February, on tax on foreign real estate investment in the Principality of Andorra created a new levy on foreign real estate investment, payable at the time of acquisition. This tax applies to non-resident individuals, individuals who have held residency for fewer than three years, and non-resident legal entities.

The rate of this foreign investment tax is structured progressively according to the number of properties acquired: 3% for a first or primary residence (including up to two parking spaces), 5% for second and subsequent purchases up to five properties, and 10% for acquisitions of six or more properties. The measure is specifically designed to curb speculative purchasing by overseas investors.

While the general rate range is 3% to 10%, a 90% reduction is available in certain circumstances — most notably where the property is committed to long-term residential rental.

Worked example: approximate total transaction costs on a €400,000 resale apartment (resident buyer with over 3 years’ residency, as of 2025)

For a non-resident purchasing their first property in Andorra at the same price, the additional 3% foreign investment tax (€12,000) would apply, bringing the estimated total acquisition cost to approximately €30,800–€32,000, or around 7.7–8%. Always confirm current rates directly with the Government of Andorra or a locally qualified adviser, since this area of tax law has been undergoing rapid development.

What taxes and fees apply when selling a property in Andorra?

The costs faced by sellers in Andorra are relatively straightforward compared with those in many other countries. The most consequential liability for most vendors will be capital gains tax on any profit realised from the transaction, which is addressed in detail in the following section. Beyond that, the seller’s primary direct cost is the real estate agent’s commission.

Agent commission is customarily set at around 5% of the sale price and falls entirely on the seller. Although this is not a tax, it is one of the most substantial charges a vendor will encounter and should be factored into any planning before a property is placed on the market.

Outside of capital gains tax, sellers in Andorra face no further government-imposed taxes on the disposal of property at this time. There is no equivalent of a vendor’s stamp duty, no conveyancing levy, and no sales registration charge payable by the person selling. Notary costs are ordinarily borne by the buyer, though this can be subject to negotiation between the parties.

Before completing a sale, vendors should also attend to practical administrative matters. A valid energy performance certificate and current property registration documents will normally be required. Non-resident sellers operate under different capital gains rules (see below), and engaging a local tax adviser before finalising a sale price is strongly recommended in order to understand the true net proceeds of any transaction.

Is capital gains tax payable on property sales in Andorra?

Capital gains arising from the sale of Andorran property are indeed taxable, though the regime is considerably more favourable than in most comparable jurisdictions — especially for owners who have held their property for many years. The framework was comprehensively overhauled by Law 5/2023, which took effect on 1 January 2024.

Prior to this reform, real estate capital gains were governed by standalone legislation. That framework was repealed by Llei 5/2023, and gains on property disposals have since been fully absorbed into the IRPF (personal income tax for residents), IS (corporate tax), and IRNR (non-resident income tax) regimes. The treatment of any given gain therefore depends on the seller’s status.

For resident individuals, a disposal within 2 years of purchase carries a base rate of 10% on the gain plus a speculative surcharge of 5%, resulting in a combined effective rate of 15%. This “guany especulatiu” surcharge was introduced specifically to deter short-term property flipping. Sales occurring after 2 years but within 5 years of acquisition attract a flat 10% rate with no surcharge.

From the 5-year mark onwards, multiplicative reduction coefficients are applied to progressively shrink the taxable portion of the gain, meaning the effective rate decreases with each passing year of ownership. By the time 13 years of ownership have elapsed, the capital gains tax liability is reduced to zero.

A full exemption from capital gains tax is also available where the sold property served as the seller’s principal residence, provided that the proceeds are reinvested in a replacement main home within 6 months. This parallels principal private residence relief concepts in other countries, though the reinvestment requirement is a key condition that distinguishes the Andorran version.

Non-residents are taxed differently: a 15% rate applies to gains realised within the first 2 years of ownership, while a flat rate of 10% under the IRNR framework applies to all subsequent disposals — there is no equivalent of the progressive holding-period reduction available to residents. The taxable base for non-residents is calculated on net income related to real estate income and capital gains.

Practical example (as of 2024)

Always verify the prevailing rate and the applicable reduction coefficient schedule with the Andorran Ministry of Finance or a qualified Andorran tax adviser, since the coefficients are set by regulation and may be revised on an annual basis.

Are there annual property taxes in Andorra?

An annual property ownership tax does exist in Andorra, but it is strikingly modest relative to the systems found across most of Europe and North America. Rather than being tied to assessed market values — as is the case with France’s taxe foncière or, in a different way, the UK’s council tax — Andorra’s annual charge is computed on a straightforward per-square-metre basis.

Owning real estate in Andorra means paying this annual levy, which is administered by the local municipalities and traditionally referred to as “Foc i lloc” (meaning “fire and place”). Each comú sets its own rate, but the average across parishes is approximately €0.75 per square metre. Notably, this obligation applies only to owners between the ages of 18 and 65.

While each comú operates its own arrangements, the overarching principle is that annual charges reflect surface area — whether built, usable, or cadastral — and vary according to property use. Certain parishes apply minimum charges; others distinguish by property category. There is no linkage to actual or market value, and no upward correction for prime locations or luxury classification. This straightforwardness is a hallmark of the Andorran tax model.

On a standard 80 m² apartment, the annual “Foc i lloc” charge at the average rate would come to around €60 — a figure that stands in sharp relief against comparable annual ownership levies in Spain or France, where equivalent properties can attract charges running to several hundred euros annually. Since rates differ by parish, property owners should always consult their local comú for current figures.

Andorra additionally assesses an annual property tax at a general rate of 0.1% of the average net book value of immovable property. This applies primarily to companies holding real estate assets. Private residential owners are principally subject to the municipal “Foc i lloc” charge rather than this corporate-focused levy.

Where a property has stood vacant for more than two consecutive years, a special tax is triggered under Law 3/2019. The charge on empty properties is set at €5.05 per square metre of total usable area, with the purpose of incentivising owners to return unused housing stock to the market and help ease pressure on housing supply.

How is rental income from property taxed in Andorra?

Tax collection in Andorra operates at two tiers: the national government and the local municipalities (comús). Municipalities hold responsibility for taxes relating to property and rental income, creating a dual structure that landlords must understand at both levels.

Rental income from real estate is taxable, with the rate determined by the owner’s tax residency. Andorran tax residents earning income from letting properties are subject to a rate of between 0.4% and 4%, while non-residents pay a flat rate of 7.5% on gross rental receipts.

For resident landlords, rental income is incorporated into the general income base under the IRPF. The broad IRPF rate of 10% applies, but two significant reliefs reduce the effective burden: the initial €24,000 of income is entirely exempt, and a bonification of up to €800 is available for income falling between €24,000 and €40,000. Income above €40,000 is subject to the full 10% rate.

Specific incentives exist for landlords providing affordable long-term accommodation. Those subject to either corporate income tax or personal income tax (IRPF) can access a 10% reduction in the rental income tax base, provided the rental rate does not exceed €9 per square metre and the monthly rent stays below €1,250. This reduction cannot generate a negative tax base.

Short-term holiday lettings — including those arranged through platforms such as Airbnb — are treated less favourably. Such arrangements are generally classified as an economic or business activity rather than passive rental income, potentially bringing them within different regulatory and tax requirements, including IGI (Andorra’s VAT). Landlords active in this segment should register with their relevant comú and take tailored professional advice, as the rules diverge considerably from those governing ordinary long-term residential letting.

Tax obligations depend on the municipality where the rented property is located, and filing deadlines differ by parish. Landlords should register rental agreements with their local comú and submit returns in line with local schedules. Non-resident landlords, taxed under the IRNR framework at the flat rate noted above, should contact the Andorran tax authority for guidance on their specific filing requirements.

Does inheritance tax apply to property in Andorra?

For property owners and those engaged in long-term estate planning, this is arguably one of the most compelling features of the Andorran tax framework. Andorra levies no inheritance tax, gift tax, or net worth tax on individuals resident in the principality. An individual resident in Andorra who receives property through an inheritance faces no Andorran tax liability on that receipt whatsoever.

There are currently no estate, gift, wealth, or inheritance taxes in Andorra, meaning that succession planning from an Andorran tax perspective involves none of the complexity seen in neighbouring jurisdictions. This is a striking contrast to both Spain and France — countries where inheritance taxes on real estate can be substantial — and to many other European nations where heirs may face significant charges upon receiving property.

Property passing on death in Andorra can therefore move to beneficiaries — whether resident or non-resident, closely related or otherwise — with no Andorran inheritance tax arising on the transfer. Notarial and registry costs associated with the legal change of title will still apply, but these are generally modest in scale.

One important qualification: while Andorra imposes no inheritance tax of its own, the country of tax residence of the heir may have independent rules that apply to assets received from foreign jurisdictions. As of early 2026, Andorra has signed 21 double taxation conventions, including with Spain, France, Portugal, Luxembourg, Liechtenstein, Malta, UAE, Cyprus, San Marino, Hungary, Czech Republic, Croatia, Monaco, Iceland, the Netherlands, South Korea, Lithuania, Latvia, Montenegro, Belgium, and the United Kingdom. Most of these agreements address income and capital gains taxes rather than succession, however. Heirs residing in countries with active inheritance tax regimes should obtain professional advice both in their country of residence and in Andorra before concluding that no tax liability exists.

Under Andorran private international law, the succession regime applicable to an estate will generally follow the personal law of the deceased’s nationality. Where, however, the deceased maintained a demonstrably closer connection to another jurisdiction, that jurisdiction’s law may take precedence. Individuals holding assets in Andorra alongside ties to other countries should ensure their succession arrangements account for this potential complexity.

Does gift tax apply to property transfers in Andorra?

Andorra imposes neither a wealth tax nor any inheritance and gift tax. This means that transferring property by way of gift — regardless of whether the transaction occurs between family members or unrelated parties — does not in itself generate any Andorran gift tax liability for either the person making the gift or the recipient, where that recipient is resident in Andorra.

The absence of any inheritance or gift tax on direct transfers between family members is one of the most appealing aspects of the Andorran tax system. Close relatives receiving gifted property will not face any tax on the assets they receive. In the case of gifts between parties who are not related, certain fees may arise, though these remain low by comparison with equivalent charges in most other countries.

It should be noted, however, that the 2024 foreign investment tax legislation includes specific provisions addressing gifts. Exceptions to the foreign investment surcharge are available for inheritances, gifts between relatives, and transactions arising from divorce. A property gifted between close family members may therefore escape the foreign investment surcharge that would otherwise apply to a non-resident purchaser, but the precise definition of “relatives” for this purpose should be confirmed with a local adviser before any transfer is structured.

As with inherited property, the absence of Andorran gift tax does not eliminate the possibility of a tax liability in another jurisdiction. The donor’s or recipient’s home country may impose its own gift or transfer taxes on property received from abroad. Anyone contemplating a gift of Andorran property should seek advice from a tax professional in both Andorra and any other relevant jurisdiction before proceeding.

Are there any tax advantages or incentives for buying property in Andorra?

A range of targeted incentives has been introduced in Andorra, particularly since the Law for Sustainable Growth and the Right to Housing entered into force. These measures are designed to support primary-residence ownership and the provision of affordable long-term rental accommodation, while discouraging short-term speculative activity.

Among the most significant provisions is an exemption from Property Transfer Tax (ITP) for individuals purchasing their first home in Andorra where the acquisition price does not exceed €600,000, provided the property is intended for use as their habitual and permanent residence. This represents a potential saving of up to €24,000 on a €600,000 purchase. Eligibility conditions should be confirmed with the Andorran Government, as specific qualifying criteria apply.

Corporate entities established in Andorra for more than five years are also exempt from ITP when acquiring affordable housing intended for rental for a minimum period of ten years. This provision is designed to bring institutional and corporate-held stock into the affordable rental market.

For landlords committed to affordable long-term letting, the legislation incorporates measures to stimulate supply: those subject to corporate income tax or IRPF may benefit from a 10% reduction in their taxable rental income base, subject to the rental rate not exceeding €9 per square metre and the monthly rent not surpassing €1,250.

Individual property owners may also be eligible to claim mortgage interest deductions when computing their personal income tax liability. This is particularly pertinent to owner-occupiers holding an Andorran mortgage and functions in a similar manner to mortgage relief arrangements that existed in various European countries before being withdrawn.

More broadly, the complete absence of wealth tax, inheritance tax, and gift tax represents a substantial structural advantage for those holding property as part of a long-term investment strategy or succession plan. For high-net-worth individuals, this combination — when set alongside Andorra’s relatively simple and low-rate personal income tax system — compares very favourably with the tax environments in neighbouring Spain and France.

Do different rules apply to foreign buyers or non-residents purchasing property in Andorra?

Yes — and this is an area that has undergone substantial change in recent years. Anyone who does not hold established Andorran tax residency should pay close attention to the additional layer of tax and regulatory requirements that now applies to them.

Between 2024 and 2025, Andorra implemented the most significant real estate tax reform in decades through the Foreign Real Estate Investment Tax (IIEI). This reform most directly affects buyers who lack consolidated tax residency in the principality, along with companies with foreign ownership structures. The tax is levied on buyers who are either non-resident or who have held residency for fewer than three years.

When combined with the standard transfer tax, first-time foreign buyers effectively face total purchase taxes of 7% (the 4% ITP plus a 3% foreign investment surcharge). For those acquiring multiple properties or purchasing primarily for investment purposes, the aggregate rate climbs further — to 5% for second through fifth properties and 10% for six or more acquisitions.

Structural restrictions exist alongside the tax measures. The 2025 Ómnibus Law limits purchases by non-residents to one single-family home or two apartments, and prohibits foreign real estate development activity, subject to limited exceptions.

Before any acquisition can proceed, non-residents must first obtain foreign investment authorisation from the Andorran Government. This authorisation is the prerequisite for the entire Andorran real estate purchase process. The requirement applies to non-residents and to many individuals who have not yet consolidated their residency status.

Residents, non-residents, and foreign investors may all acquire Andorran property, but the taxes applicable at the point of purchase differ materially according to the buyer’s classification. The Andorran government permits foreign investment from most nationalities, although certain country-specific restrictions exist, and Andorran financial institutions maintain lists of higher-risk jurisdictions, meaning thorough documentation of the source of funds may be required.

Non-resident sellers face distinct capital gains rules as well, as noted in the capital gains section above: the progressive holding-period reduction that benefits resident sellers does not apply to non-residents, meaning a flat 10% IRNR rate applies regardless of the duration of ownership once the two-year threshold has passed. Always verify all current obligations directly with the Government of Andorra or a locally qualified tax adviser before committing to any transaction.

How do I apply for foreign investment authorisation and complete a property purchase in Andorra?

1. Obtain foreign investment authorisation: Non-residents and residents with fewer than three years of residency must apply to the Andorran Government for authorisation to invest in real estate before any purchase can proceed. This is a formal administrative process; seek legal assistance to prepare the application correctly.
2. Agree the purchase price and sign a preliminary contract: Sign the promise to buy-sell contract and pay 10% of the agreed sale price as a non-refundable deposit to reserve the property, unless the seller fails to comply with the agreed conditions.
3. Conduct due diligence and legal checks: Verify the property’s registration at the Land Registry (Registre de la Propietat), confirm there are no outstanding charges or encumbrances, and review planning and building permissions.
4. Calculate and prepare payment of purchase taxes: Buyers pay the ITPI/ITP transfer tax of 4% on the agreed sale price. Non-residents must also prepare payment of the foreign investment tax. Calculate the correct amount in advance, as payment is required at the notary.
5. Complete the transaction at the notary: The buyer pays the transfer tax to the notary when concluding the purchase agreement. The notary prepares and authenticates the title deed (escriptura), and all taxes and fees are settled at this stage.
6. Register the property: After signing, the title deed must be registered at the Land Registry. Registration confirms legal ownership and should be completed promptly after the notarial signing.
7. Notify the relevant comú: Register the change of ownership with the local municipality (comú) to ensure annual property tax records are updated correctly and to fulfil any local administrative obligations.

Frequently asked questions about property taxes in Andorra

Is there a stamp duty equivalent when buying property in Andorra?

Buyers of resale properties pay a tax known as ITP — sometimes informally described as a stamp duty equivalent — amounting to 4% of the agreed purchase price. For new-build properties, the relevant charge is instead IGI (Andorra’s consumption tax) at 4.5%. These represent the closest parallels to stamp duty land tax found in other systems. Always verify current rates with the Andorran tax authority before proceeding.

Do I pay capital gains tax if I sell my primary residence in Andorra?

A full capital gains tax exemption may be available where the property sold was the seller’s primary residence, provided the proceeds are used to acquire a replacement main home within six months. This exemption is conditional and subject to specific qualifying requirements. Consult a locally qualified tax adviser to verify your eligibility before relying on this relief.

Can I inherit Andorran property without paying tax?

Andorra levies no inheritance, gift, or net worth tax on individuals resident in the principality. An Andorran resident receiving property through an inheritance therefore faces no Andorran tax on that transfer. However, the heir’s country of tax residence may impose its own rules on assets received from overseas. Always seek professional advice in both jurisdictions before assuming that no liability arises.

What is the annual property tax like in Andorra compared to other countries?

The annual ownership levy, traditionally called “Foc i lloc,” is imposed by local municipalities at an average rate of approximately €0.75 per square metre. For a typical 80 m² apartment, this produces an annual charge of around €60 — a fraction of the annual property taxes that would apply to a comparable home in France, Spain, or the United Kingdom.

Do non-residents pay more tax when buying property in Andorra?

Yes. Since February 2024, non-resident foreign purchasers are required to pay a foreign investment tax in addition to the standard transfer tax. The rate is 3% for a first or primary residence, 5% for the second through fifth property, and 10% for six or more properties. This surcharge is layered on top of the standard 4% ITPI. Consult the Government of Andorra for the most current rates and any applicable reductions.

Is rental income from my Andorran property taxed if I live abroad?

Non-residents earning rental income from Andorran property are subject to a flat rate of 7.5% on gross receipts, collected under the IRNR (Non-Resident Income Tax) framework. Registration of the rental activity with the relevant comú is also required. Double taxation treaties between Andorra and your country of residence may influence your overall liability, so advice from a cross-border tax specialist is recommended.

How long do I need to own a property before capital gains tax reduces significantly?

For resident individuals, the speculative surcharge bringing the total rate to 15% applies to sales within 2 years of purchase. A flat 10% rate without surcharge applies to sales between 2 and 5 years. From 5 years onwards, progressive reduction coefficients diminish the taxable gain each year. After 13 years of ownership, the effective capital gains tax rate reaches zero. These reductions apply to residents only; non-residents face a flat 10% IRNR rate for all disposals beyond the initial two-year period.

Are there any restrictions on how many properties a non-resident can buy in Andorra?

The 2025 Ómnibus Law restricts non-resident buyers to acquiring one single-family home or two apartments, and bars foreign real estate development activity other than in limited exceptional circumstances. These restrictions mark a significant tightening compared with previous rules, and further regulatory evolution is anticipated. Always confirm the current position with the Andorran Government or a locally qualified legal adviser before proceeding with any acquisition.