Andorra Sustainable Growth Law 2026: Continuity and Consolidation of Measures
New Andorra Law on Sustainable Law approved by Parliament
Key Takeaways
- The 2026 Law on Continuity and Consolidation of Measures for Sustainable Growth formally extends and refines the 2025 Omnibus housing and immigration reforms, creating a stable multi-year regulatory framework rather than a completely new regime.
- When the new Act enter into force (probably in 7-10 days), foreign investors and expats can still obtain residency and invest in andorran real estate, but under stricter quantitative limits, new sustainability criteria, and higher financial thresholds in certain cases.
- The law introduces multi-year planning targets through 2030 covering housing supply, population ceilings, and infrastructure capacity to ensure sustainable growth rather than uncontrolled expansion of the country’s economy.
- Key mechanisms from 2025 are preserved: progressive tax on foreign real estate investment (6-10%), vacant property mobilization powers, tourist rental moratoriums, and enhanced residency compliance monitoring.
- Practical planning is essential—investors, residents, and prospective applicants must understand consolidated rules before committing funds, as renewals face closer scrutiny for genuine economic substance and housing impact.
Introduction: What Is the 2026 Law on Continuity and Consolidation of Measures for Sustainable Growth?
Andorra’s housing crisis didn’t emerge overnight. Following the global pandemic, the Principality experienced a dramatic surge in foreign investment that sent property prices and rents spiraling upward—in some areas by 300-400%. Families who had lived in Andorra for decades suddenly found themselves priced out of the rental market. The andorran government responded in 2025 with emergency legislation, but those measures were designed as medium-term fixes with built-in expiry dates.
The 2026 Law on Continuity and Consolidation of Measures for Sustainable Growth represents the next chapter: converting temporary emergency rules into a predictable, long-term framework. This legislation consolidates provisions on foreign real estate investment, passive and active residency, tourist rentals, and empty property mobilization into a stable multi-year regime aligned with Andorra’s development vision through 2030.
What does “sustainable growth” actually mean in the Andorran context? The government defines it across four pillars: controlled population growth that doesn’t outstrip housing supply, adequate residential availability for permanent residents, protected environment and infrastructure capacity, and a diversified, resilient economy less dependent on speculative investment. The law explicitly aligns these goals with European Commission ESG criteria, the Paris Agreement, and the United Nations 2030 Sustainable Development Agenda.
The rest of this article walks through the main chapters of the law: real estate and housing rules, company investment requirements, immigration and residency pathways, tourist rental restrictions, empty property mechanisms, and the fiscal and planning instruments that tie everything together.
Background: From the 2025 Omnibus Law to a Long-Term Growth Strategy
The 2025 Omnibus housing and immigration law emerged as Andorra’s direct response to extreme price increases that threatened social cohesion. That legislation introduced strict limits on foreign real estate purchases, tightened residency by investment requirements, and created mechanisms to return vacant properties to the rental market. The government explicitly targeted recovery of approximately 1,500 housing units for the rental market over a three-year period.
However, the Omnibus law was initially framed as a medium-term emergency measure. Several key articles were set to expire or undergo mandatory review by the end of 2025, creating uncertainty for residents, investors, and the professionals advising them. Would the restrictions continue? Would they tighten further or relax?
The 2026 consolidation law answers those questions by converting short-term fixes into a predictable rulebook. Prepared through 2024-2025 consultations with local councils, the private sector, and civil society, the legislation harmonizes overlapping regulations that had accumulated in layers: immigration quotas, the foreign real estate tax introduced in February 2024, and residency reforms announced in September 2022.
Understanding the timeline helps make sense of the current framework:
- 2012: Launch of investment residency programs opening Andorra to foreign investors
- 2022: Significant residency reforms tightening requirements for permits
- 2024: Introduction of progressive tax on foreign real estate purchases (3-10% rate structure)
- 2025: Omnibus Law on housing and immigration creating emergency measures
- 2026: Consolidation law converting temporary measures into stable multi-year regime
This progression shows Andorra’s evolution from relatively open investment policies toward a more managed approach that balances economic openness with housing accessibility and sustainable development.
Real Estate and Housing: Consolidated Rules for Sustainable Supply
The 2026 law consolidates and slightly revises the 2025 rules governing foreign real estate investment, housing protections, and long-term rental obligations. Rather than creating new restrictions, it primarily clarifies existing ones and extends their duration to ensure stable housing supply from 2026 onwards.
The law maintains the basic quantitative caps for foreign investors—limits on how many and what types of properties they can acquire. However, it adds clearer exceptions tied to social and affordable housing projects, recognizing that some foreign investment actually helps housing accessibility when structured appropriately.
Government-controlled rent schemes are extended and indexed to inflation. Specific durations remain a condition for exceeding standard property limits: investors who want to buy more than the baseline caps permit must commit properties to regulated rental schemes for at least 10 years.
New 2026 planning requirements introduce multi-year housing construction targets by parish. Large developments must complete mandatory impact assessments, and potential incentives apply when at least 50% of units are dedicated to regulated long-term rentals rather than speculative ownership or tourist accommodation.
The law also clarifies how contributions to the Andorran Housing Fund and participation in public-private partnerships can partially offset the progressive foreign real estate tax. This creates a pathway for international investors who genuinely want to contribute to housing solutions rather than simply profiting from scarcity.
Foreign Real Estate Investment: Stable Caps and New Sustainability Conditions
The 2026 law confirms the definition of “foreign investor” as either a non-resident individual or a resident with less than three years of legal residence. It maintains the category-based property limits with minor technical clarifications:
Property Type
Maximum for Foreign Investors
Land plots
1
Houses
1
Apartments
2
Parking spaces
6
From 2026, exceeding these standard property caps requires not only long-term regulated rent commitments but also compliance with basic environmental and energy-efficiency standards. Properties must feature high-efficiency insulation and low-emission heating systems, reflecting Andorra’s broader sustainability commitments.
The progressive tax on properties purchased by foreign buyers is formally integrated into the sustainable growth framework:
- 6% on first property acquisition
- 10% for the second or subsequent acquisitions
Foreign-led real estate developments face specific allocation requirements: at least 50% of units must be committed to controlled long-term rentals for Andorran residents. The 2026 law clarifies how these percentages are calculated and monitored, reducing ambiguity that created compliance challenges under the earlier framework.
Example scenario: A foreign investor purchasing a small apartment building with 10 units in 2026 would need to commit at least 5 units to government-regulated rental rates for a minimum 10-year period. The properties acquired would need to meet energy efficiency standards, and the investor would pay the applicable progressive tax rate based on their total Andorran property holdings.
Company Investment and Economic Diversification under the 2026 Law
Sustainable growth isn’t only about housing. The 2026 law refines rules for foreign investment in andorran companies to favor projects that create real economic activity and skilled jobs rather than serving primarily as residency vehicles.
Prior authorization for foreign investment in local companies remains mandatory, particularly for structures used to obtain active residency (the J.1 permit category). Review criteria now explicitly include sustainability alignment, economic diversification contribution, and employment metrics alongside traditional financial assessments.
The law reaffirms the requirement that new companies with foreign ownership generate income within 18 months. The 2026 framework adds clearer penalty and revocation procedures when this requirement isn’t met, reducing ambiguity that previously allowed non-compliant structures to persist.
In line with the 2024 Foreign Investment Law amendments, investments from countries with double taxation or cooperation agreements—particularly France and Spain—may enjoy simplified procedures when aligned with the sustainable growth strategy. This recognizes Andorra’s geographic and economic integration with its neighbors while maintaining oversight.
Preferred sectors under the 2026 framework include:
- Digital services and digital economy businesses with low housing impact (remote teams, limited office footprint)
- Green technologies and renewable energy services
- High-value tourism services that enhance rather than strain infrastructure
- Financial services meeting international financial reporting standards and transparency requirements
Residency Linked to Company Formation: Stricter 2026 Controls
The 2026 law continues efforts to prevent misuse of company formation solely for residency purposes. The J.1 active residency category faces reinforced checks on turnover, staffing, and local substance—including verified office space, documented client relationships, and genuine business activity.
Immigration authorities and the economic ministry are now mandated to share data and conduct joint reviews of active residency permits at the 2-year and 5-year marks. These reviews verify that declared business plans are actually being implemented, with real employees, genuine revenue, and identifiable clients.
The law establishes specific sanctions for shell companies used primarily for residence permits rather than genuine economic activity:
- Non-renewal of permits at review dates
- Financial penalties for misrepresentation
- Mandatory waiting period before re-application
For genuine entrepreneurs, the path forward is straightforward: structure your Andorran company with real substance from day one. Maintain documented client relationships, hire local staff where appropriate, establish physical office presence, and generate actual revenue aligned with your declared business model.
Immigration and Residency: Continuity with Targeted Adjustments
The 2026 law doesn’t reinvent Andorra’s immigration system. Instead, it consolidates changes introduced between 2022 and 2025 with moderate adjustments to thresholds and conditions. For most applicants and residents, the framework remains familiar—just more systematically organized and rigorously enforced.
The continued differentiation between passive residency (investment-based) and active residency (work-based or company) remains central. Each category carries specific requirements, benefits, and monitoring obligations under the consolidated framework.
Population and residency quotas are now embedded in a multi-year planning framework. Annual caps are linked to housing stock availability, infrastructure capacity, and labor market data rather than set arbitrarily. This creates more predictability for long-term planning while ensuring Andorra doesn’t accept more residents than it can sustainably accommodate.
The law maintains stricter early-stage restrictions for certain permit types. For example, A.1 residents face limitations on working or owning companies during their first year, preventing strategies designed to circumvent investment or bond requirements by quickly transitioning between permit categories.
Importantly, the 2026 law requires periodic review of income, investment, and physical presence thresholds to ensure they track inflation and real estate price changes. This provides more predictability for long-term residents while ensuring requirements remain meaningful as economic conditions evolve.
Passive Residency by Investment in 2026
The baseline requirements for passive residency remain substantial under the 2026 framework:
Requirement
Amount/Threshold
Minimum investment
€1,000,000 or €800,000 Real Estate Investment (or €400,000 via Housing Fund)
Non Refundable Andorran Financial Authority
€50,000 (main applicant) + €12,000 per financially dependent family member
Minimum annual income
€52,100 (main applicant) + additional for minor children and family members
Physical presence
Minimum 90 days a year
The 2026 law confirms these thresholds but clarifies how investments may be split among different asset classes: property in andorra, local securities including government bonds and debt instruments, and contributions to the Housing Fund. Priority is given to allocations supporting affordable housing or low-impact sectors.
Stricter valuation rules now apply to real estate used for passive residency qualification. Properties must meet a single-unit minimum value of approximately €800,001, preventing fragmented purchases of multiple low-value units designed to technically satisfy investment requirements while minimizing actual capital commitment.
Permit renewal conditions are tightened slightly. Authorities now explicitly check:
- Continued investment compliance (assets maintained, not liquidated)
- Actual physical presence meeting minimum thresholds
- Absence of speculative short-term property flipping
- Valid medical insurance coverage for the entire duration of residency
Typical 2026 passive residency application process:
- Preliminary consultation with migration service to verify eligibility
- Criminal record checks and medical examination
- Investment structuring and asset verification
- Submission of financial documentation (annual income proof, investment evidence)
- Payment of government fees and required deposits
- Security deposit placement with Andorran Financial Authority
- Application review and authorization
- Establishment of andorra residence permit and resident status
Active Residency, Digital Nomads, and Other Non-Investment Routes
Active residency remains available for employees with local job contracts, self-employed professionals, and company directors. The 2026 law reinforces the requirement of at least 183 days of presence for renewals, ensuring that residents actually live in Andorra rather than maintaining permits purely for tax purposes.
The digital nomad residence permit is integrated into the sustainable growth framework with specific monitoring provisions. Digital nomads represent a population segment that can contribute economically while potentially straining housing markets. Authorities may now require proof of adequate long-term accommodation—not just hotel bookings—before approving or renewing these permits.
Student permits and family reunification permits are maintained, but the 2026 law introduces clearer capacity-based limits tied to educational and health infrastructure. When schools or medical facilities approach capacity in specific parishes, permit issuance may be temporarily restricted.
For all active categories, under-utilized permits face increased scrutiny at renewal. Minimal presence or lack of genuine activity now more likely results in refusal, aligning permit allocation with sustainability goals rather than accommodating residents who rarely actually reside in the country.
Empty Properties, Seizure Mechanisms, and Housing Mobilisation
Sustainable growth requires full utilization of existing housing stock. The 2026 law prolongs and systematizes the state’s power to temporarily requisition empty apartments, recognizing that voluntary market mechanisms alone haven’t adequately addressed vacancy issues.
Properties left vacant beyond defined periods can be requisitioned for up to 5 years. Owners receive compensation at government-controlled rental prices—less than market rates, but guaranteed income for properties that would otherwise generate nothing. The government may finance necessary renovations up to the equivalent of two years’ rental value, enabling run-down units to return to habitable condition.
Exemptions are maintained but clarified to reduce litigation:
- Second homes with documented personal use
- Properties actively offered for sale or rent for less than 18 months at market rates
- Properties undergoing documented renovation with clear completion timelines
The 2026 law introduces new obligations for large institutional owners and funds. These legal entities must report vacancy rates annually and may face higher contributions to the Housing Fund when maintaining significant empty stock without justification.
How to avoid seizure in 2026:
- Offer long-term rentals: Even at government-controlled rates, renting prevents requisition and generates income
- Participate in public programs: Housing Fund partnerships or municipal rental schemes demonstrate good faith use
- Document sale/rental efforts: Keep records of listings, marketing activities, and prospective tenant interactions
- Complete renovations promptly: If claiming renovation exemption, maintain documented progress toward completion
Fiscal and Planning Instruments for Sustainable Growth
Beyond immigration and housing rules, the 2026 law formalizes a comprehensive toolkit of fiscal and planning instruments designed to steer Andorra’s growth trajectory.
The progressive tax on foreign real estate purchases is confirmed as a permanent feature:
Number of Properties
Tax Rate
First purchase
6%
2 or more
10%
Revenues are partially hypothecated—legally earmarked—for social housing construction and infrastructure development. This creates a direct link between foreign investment activity and housing solutions, ensuring that market pressure generates resources for market relief.
The property transfer tax and capital gains tax provisions interact with these foreign investment levies. The law waives ITP (property transfer tax) for residents with more than five years of residency purchasing their first home under €500,000, while increasing taxation on capital gains from speculative transactions. This bifurcated approach supports permanent residents while discouraging short-term property flipping.
The law strengthens coordination between national and parish-level planning. Large developments must demonstrate alignment with transport capacity, environmental constraints, and public service availability. This prevents concentrated development that strains specific communities while other areas remain underutilized.
The government must now publish an annual sustainable growth report monitoring key indicators:
- Population levels and growth rates
- Housing prices by parish and property type
- Rental vacancy rates and controlled rental unit availability
- Composition and renewal rates of residence permits
- Foreign investment volumes and sectoral distribution
Investors and residents can use these public reports to plan long-term decisions, anticipate policy adjustments, and identify emerging opportunities or constraints before they become binding regulatory changes.
Practical Implications in 2026 for Investors, Residents, and Applicants
The 2026 law affects three main audiences differently, and understanding your specific position is essential for effective planning.
For international investors, early structuring is crucial. Choose compliant property types that fit within caps, respect the limits on properties acquired unless you’re willing to make long-term rental commitments, and factor progressive taxes into financial models from the outset. Building long-term rental obligations into your investment assumptions isn’t optional—it’s the price of participation beyond baseline thresholds.
For existing residents, renewal scrutiny has increased. Document your physical presence carefully, maintain investment compliance throughout your permit period, and prepare housing-related documentation well before renewal applications. Authorities will verify that you actually live in Andorra and that your investments remain in place as originally declared.
For new applicants in 2026, understand the consolidated rules before committing funds. Ensure your chosen pathway—whether passive residence or active residency—aligns with both sustainable growth criteria and your personal goals. The minimum investment thresholds, income requirements, and new tax obligations should be factored into your decision before you pay taxes, notary fees, or government fees.
Action items for 2026:
- Review your property portfolio against current caps and assess compliance
- Validate your residency strategy against updated renewal criteria, including presence requirements
- Consider investment options that complement Andorra’s sustainability priorities rather than working against them
- Consult with qualified professionals familiar with the consolidated framework before making major commitments
FAQ
Does the 2026 sustainable growth law make it harder to obtain Andorran residency?
The law primarily consolidates existing restrictions from 2022-2025 rather than drastically tightening access. The fundamental pathways remain: passive residency still typically requires around €800,000/€ 1,000,000 in investment, while active residency depends on genuine employment or company formation. The key change is more rigorous monitoring of economic substance, housing impact, and compliance at renewal stages. Applicants who plan ahead, meet financial thresholds, demonstrate genuine presence, and choose compliant investment structures should still be able to obtain and renew residency. The law targets abuse and speculation, not legitimate relocation.
Can foreign investors still buy multiple properties in Andorra after 2026?
Basic caps remain in place—one plot, one house, two apartments, and six parking spaces—unless investors participate in approved affordable housing or long-term rental schemes. Exceeding these limits generally requires binding commitments to rent a portion of units at government-regulated prices for at least 10 years, plus compliance with environmental and energy standards. The progressive foreign real estate tax applies regardless: plan for 6% on your first acquisition scaling up to 10% for larger portfolios. Multiple acquisitions remain possible but require substantially more commitment than simply having available capital.
What happens to my tourist rental licence under the 2026 law?
The moratorium on new tourist rental licenses continues indefinitely. For existing licenses, the 2026 law primarily affects renewal conditions. Most licenses face renewal by 30 April 2028, with certain 5-star categories extended to 30 April 2030. Renewal requires that at least 60% of your building remains residential housing—if that ratio has shifted toward tourist use, renewal may be denied. Assess whether continued tourist rental operation makes financial sense under stricter sustainability and building-mix conditions, or whether conversion to long-term residential leasing offers a better path forward.
Will the government still be able to seize empty properties after 2026?
The 2026 law preserves and structures the temporary seizure mechanism for empty properties. Requisition periods can extend up to 5 years, with owners receiving compensation at government-regulated rental rates. Exemptions exist for genuine second homes, properties actively marketed for sale or rent (typically under 18 months), and units undergoing documented renovation. Owners should maintain clear documentary proof of use, marketing efforts, or renovation progress to demonstrate their property shouldn’t be classified as “unjustifiably empty.” Proactive engagement with rental markets or public housing programs provides the clearest protection.
How should I plan long-term investments in Andorra given the 2026 framework?
Assume continued strict control over housing and immigration through at least 2030. Favor projects that add long-term value: energy-efficient real estate development, diversified business activities with genuine employment, and participation in the Housing Fund or similar mechanisms. Model taxes, rental obligations, and compliance costs comprehensively, using government sustainable growth targets and annual reports as reference points. Aligning investments with Andorra’s stated priorities—housing availability, limited environmental impact, and local job creation—reduces regulatory risk over time. The country offers significant opportunities, but success increasingly requires integration with rather than resistance to sustainability objectives.
