Real Estate

Fintax Real Estate Andorra | Legal, Tax & Analysis Guide.

By
Jose Maria ALFIN
on
April 25, 2022

Summary on legal, tax, and current momentum of the Andorra Real Estate Market for taxpayers. Fintax Real Estate Andorra: Legal, Tax & Analysis Guide.

Brief summary on the legal, tax and momentum of the Real Estate market in Andorra

I have received several queries about how the Real Estate in Andorra is working. 

After the crisis arising from the COVID 19; the increase on the tax pressure over the tax payers in other countries and the high demand of people trying to relocate to Andorra and the Andorra Tax attractive system, quality of life, has provoked that the demand for properties in Andorra has increased very significantly. 

As starting point, I want to share with you some thoughts on the topic: 

What you should take into account when buying a property in Andorra?: 

  • Andorra is a country of 470 km with a very difficult geography.
  • High demand of people demanding high class properties (HNWI or UHNWI)
  • Prices are increasing month after month. 
  • The legal requirements for Real Estate Investments in Andorra are not exactly the same in the different regions.
  • Permits by the Andorran Government are required to buy a property by a non-resident. 
  • Analysis on the taxes applicable to Real Estate transactions in Andorra. 

(i)  The first step required is to visit the country and analyse the pros and cons of each area. Prices are not equal depending on where the property is located. 

(ii) If you are buying the property before having a residence permit, it is necessary to apply for a licence of foreign investment to the Government. If the buyer is a company buying for business purposes, the law requires the incorporation of a local company to handle the investment. 

(iii) Taxes to be considered are: 

For the Buyer: Transfer Tax if the seller is an individual not conducting business activities or VAT in case the seller is a company with business activity, Rate at 4,5%

For the Seller. Analyse the potential Capital Gain arising from Real Estate. Rates degressive from 15% up to 0% if the investor or buyer maintained the property for more than ten years. 

(iv) From the Andorra legal point of view, it is necessary to appear before a Public Notary for granting the corresponding Public Deed. But before doing that it is essential to carry out a due diligence over the property by contracting the services of an Attorney specialised in Real Estate law. 

In summary, the high interest in Andorra Real Estate is reasonable. I understand that this market is in a very interesting momentum for investors or for individuals relocating, since the value of the properties will continue gaining value. 

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