The cost of buying property in Andorra: taxes & fees

The Andorran market at a glance

Andorra is a small, supply-constrained market: seven parishes in a mountain valley system, strict building control and heavy international demand. On Habio, Andorran homes currently list from about €390,000 to €4.4 million, with a typical (median) asking price around €1.75 million — skewed toward the chalet and premium-apartment stock that international buyers search for in Escaldes-Engordany, Andorra la Vella and the ski parishes.

Prices per square metre in prime areas now rival serious European cities, which surprises first-time visitors. The flip side: liquidity is decent, the buying process is notary-driven and clean, and ownership costs after purchase are genuinely low.

Step zero for foreigners: investment authorisation

Before a non-resident foreigner can buy Andorran property, they need foreign investment authorisation from the government — a formal application identifying the buyer and the property. It's normally granted for straightforward residential purchases, but it takes time (typically a few weeks) and must be secured before completion; your lawyer handles it as a matter of routine.

Budget for the administrative cost through your lawyer rather than as a separate line. The practical impact is on timing: build the authorisation into your purchase timeline, especially if you're coordinating a sale elsewhere.

Transfer tax on resale homes (ITP)

Resale purchases attract property transfer tax (ITP) of around 4% of the price, split between the national government and the parish (comú). It's the single biggest traditional cost line and is paid at completion through the notary.

On new builds bought from a developer you pay IGI — Andorra's VAT equivalent, at a general rate of 4.5% — instead of ITP. The difference between 4% and 4.5% rarely drives the decision, but confirm which regime your purchase falls under.

The foreign real-estate investment tax — the new line item

Andorra introduced a tax on foreign real-estate investment in 2024, in response to price pressure on locals. It applies on top of ITP/IGI for foreign buyers and works on a sliding scale — commonly cited around 3% for a first, single home, rising through the bands to as much as 10% for multiple properties or larger development-style investments. Reliefs and rebates exist in some cases (for example where property is put to long-term rental).

This is the newest and most change-prone part of the cost stack: rates, bands and reliefs are actively debated in Andorra. Treat the 3–10% range as planning guidance and have your lawyer confirm the exact current liability for your specific purchase before you sign anything.

Notary, legal and registration fees

Andorran conveyancing runs through a notary, whose fees are typically a fixed component plus a small percentage of the price — for most purchases they land well under 1%. Independent legal advice is strongly recommended for foreign buyers (the notary is neutral, not your advocate); lawyers commonly charge around 1% of the purchase price, sometimes less on larger deals.

There's no separate land-registry fee on the scale Spanish or French buyers may expect — registration is handled within the notarial process. If you're buying with a mortgage, add the lender's arrangement and valuation fees (below).

What to budget in total

Stacking the lines for a foreign buyer of a resale home:

• Transfer tax (ITP): ~4% — or IGI at 4.5% on a new build
• Foreign real-estate investment tax: ~3% for a single home (scaling up to ~10% in higher bands) — verify current rates
• Legal fees: ~1%
• Notary: fixed + variable, usually well under 1%
• Rule of thumb: budget roughly 8–10% on top of the price for a single-home foreign purchase, and confirm the exact stack with your lawyer before offering

Worked example: buying at the typical price

Take the current median asking price on Habio of about €1,750,000 for a resale home, bought by a non-resident foreigner as a single residence:

Transfer tax at 4% ≈ €70,000. Foreign-investment tax at 3% ≈ €52,500. Legal fees at 1% ≈ €17,500. Notary ≈ €3,000–5,000. Total transaction costs ≈ €145,000 — call it 8.3% on top of the price, for an all-in cost around €1,895,000. If the same purchase fell into a higher foreign-investment band, the total could reach 11–15%, which is why confirming your band up front matters.

The recurring costs of ownership

This is where Andorra shines. There is no significant national annual property tax; the parishes levy modest local property rates and residence-linked charges (the traditional foc i lloc among them) that typically come to hundreds of euros a year, not thousands. For an apartment or a chalet in a managed development, add community fees for shared services — commonly in the low thousands per year depending on amenities.

Utilities are reasonable (electricity and heating are the big winter lines in a mountain climate), buildings insurance is inexpensive, and if you let the property, rental income is taxed at Andorra's low rates. All told, holding costs on a lock-up-and-leave basis are among the lowest in western Europe.

Selling later: capital gains

Andorra taxes gains on property sales on a taper designed to discourage flipping: the rate starts around 15% for properties sold within the first year or two and steps down with each year of ownership, reaching zero after roughly a decade. Long-term owners therefore commonly sell tax-free; short-term speculators pay the most.

Factor the taper into your horizon: if your plan might involve selling within five years, model the exit tax alongside the purchase costs above. As with the foreign-investment tax, the exact schedule should be confirmed at the time — it's a live policy area.

Mortgages for non-residents

Andorran banks do lend to non-residents, but conservatively: loan-to-value is often capped around 50–60% (residents do better), terms are shorter than the 30-year norms of bigger markets, and the bank will want full financial disclosure — Andorran banking is compliance-heavy these days. Arrangement fees and a valuation add a further few thousand euros to the cost stack.

Many foreign buyers therefore purchase in cash or borrow against assets at home. If you do want local financing, engage the bank early: approval can take as long as the investment authorisation, and offers are personalised rather than off-the-shelf.

Property and residency: the passive-residence route

Many buyers pair the purchase with Andorran residency. The best-known route, passive residence (residency without local employment), requires a substantial investment in Andorra — the threshold has been around €600,000 in recent years, and the home itself can count toward it — plus a refundable deposit with the Andorran financial authority and proof of income and insurance. Thresholds and conditions have moved more than once recently; confirm the current figures before building plans on them.

Note the interaction: the property that qualifies you for residency also triggers the foreign-investment tax at purchase if you're not yet resident. Sequencing (and whether you'll spend the required days in Andorra) is exactly the kind of question to put to a local adviser before you commit.