The New Restrictions on Foreign Investment in Andorra

In recent months, Andorra has introduced significant changes to its foreign investment legislation, particularly in the real estate sector. These changes reflect the need to control the impact of foreign investment on housing and to ensure sustainable development within the country.

In 2023, Law 16/2023 was enacted, temporarily suspending new foreign investment authorisations in real estate by non-residents and companies with foreign capital. This measure aimed to curb the surge in property purchases by international investors, which was seen as a contributing factor to rising housing prices and reduced accessibility for local residents. The suspension was intended to allow time for the implementation of more restrictive policies and progressive taxation, encouraging high-value-added investments over those seeking short-term profitability in the property market.

In February 2024, Law 3/2024 was passed by the General Council, introducing a specific tax on foreign real estate investment. This law not only imposes a tax on such investments but also amends Law 10/2012 by expanding the definition of “foreign investor” to include residents with less than three years of continuous stay in Andorra.

Law 3/2024 establishes a “negative administrative silence” system, meaning that if investment applications do not receive a response within a set period, they are automatically considered rejected—replacing the previous system where silence implied approval.

These reforms aim to balance foreign investment with the country’s social and economic interests, promoting sustainable and beneficial investments while regulating those that may contribute to real estate inflation. The changes have raised concerns among investors, particularly those interested in the property sector, as the new regulations may reduce business opportunities and limit foreign capital inflow into Andorra’s real estate market.