Foreigners are banned from buying property in Andorra, as the government has introduced a temporary ban due to internet celebrities and wealthy foreign investors, causing real estate prices to climb over 30 per cent for a five-year period.
Andorra, a microstate between Spain and France, is popular for its ski resorts, mild summers and convenient tax breaks, attracting thousands of foreign investors to this ‘tax haven’.
Real estate prices in Andorra rose by 13 per cent between October 2022 and March 2023, while last year, some 500 real estate applications were approved by the government, with investors buying properties with a value of up to €183 million.
Foreign Investments Banned for Three Months in a Bid to Tackle Housing Crisis
The Andorran government introduced a ban on investments from overseas for three months, to later be replaced by a tax on all foreign property purchases.
The tax revenue will instead be used to build more affordable rental accommodation. The average square metre price in Andorra is higher than in most Barcelona districts, amounting up to €4,700.
On the other hand, Andorrans can struggle to afford to live in their own home country due to a considerably low minimum wage of €1,300, while buying a property in this microstate can be three to four times more than the minimum wage that working-class nationals earn monthly.
The restrictions will apply to non-residents, which leaves space for investors to apply for residency permits. In order to be a ‘passive resident’ in Andorra, one must live there only for 90 days per year. While the permit does not allow a foreigner to be employed by an Andorran-based company, the situation is ideal for digital nomads who generate income globally.
Passive residents must have invested around €600,000 into the country, the majority of which has to be invested in properties, but this requirement can be waived if the subject is earning money abroad.
Ban to Further Push Catalan Language Proficiency Requirements
The recent ban will not only limit investments to Andorra but also make it more challenging for individuals looking to purchase real estate in the country, as there is a language proficiency requirement to obtain a residence permit in the country.
Starting in 2024, residence permit holders in Andorra will have to prove they can communicate in basic Catalan in order to renew their permits. As the country tries to preserve its language, applicants will have to attend a 30-hour Catalan course.
The whole situation has sparked debate and has been criticised by outsiders, with some public personalities even raising questions about Andorra operating as a dictatorship.
