Parliament approved legislation on January 22 that raises Andorra’s passive residency investment requirement from €600,000 to €1 million. The law eliminates refundable deposits in favor of non-refundable state fees while introducing an alternative of €400,000 through the Housing Fund.
The bill must now appear in the Principality’s Official Gazette before taking effect. Authorities have not announced a publication date, though the law takes effect the day after publication.
Parliament approved the legislation following committee review of 43 amendments between January 9 and 19. The Economics Commission unanimously approved nine amendments, passed 12 by majority vote, and rejected 14 before advancing the bill for final approval.
Marc Cantavella Soler, co-founder of Relocate Save and an expert on Andorran taxation, characterizes the reform as “not a simple policy adjustment, but a deliberate repositioning.”
Sustainability concerns and the need for controlled demographic growth drive this transition from an “accessible tax alternative” to a “highly exclusive” jurisdiction, according to Cantavella Soler.
Deposits Become Permanent State Payments
Current rules require that applicants deposit €48,500 with the Autoritat Financera Andorrana (AFA), plus €10,000 per dependent. Authorities return these amounts in full when residents renounce their status or obtain citizenship.
The new framework requires that applicants pay €50,000 to the state for the main applicant and €12,000 per dependent. The bill specifies that these amounts are paid definitively and are non-refundable, except if authorities deny the initial immigration authorization.
Once authorities communicate the granting of the authorization, the AFA must transfer these amounts to the finance ministry. The law states these payments remain for the benefit of the State.
The law requires that applicants invest permanently and effectively a minimum of €1 million in Andorran assets. Investment options include:
- Non-remunerated deposits with the AFA
- Real estate
- Shares in Andorran companies
- Debt instruments or financial instruments issued by Andorran entities
- Collective investment funds under Andorran law
- Government bonds
- Life insurance products with Andorran entities
For collective investment funds, the law caps the investment period at 36 months maximum. After this period expires, holders must redirect their investment to other Andorran asset types for the investment to continue qualifying. Applicants must prove this redirection under conditions determined by regulation.
If applicants choose real estate as part of their €1 million investment, the law requires that they allocate an amount exceeding €800,000 to each real estate unit acquired.
Alternatively, applicants can reduce the total requirement to €400,000 by investing in the Housing Fund. The law specifies that this reduced amount applies, provided the investment is made directly or indirectly and “permanently and effectively” in the Housing Fund.
The fund appears to function as a public-private mechanism promoting affordable social housing, though the law references compliance with separate applicable regulations governing the fund’s operation.
Applicants have six months from the date they register their immigration authorization request to make the investment effective.
Authorities can extend this period by six additional months, provided applicants prove the investment could not be formalized due to force majeure or fault of a third party. Once this period expires, residents must provide supporting documents for their investment under conditions determined by regulation.
The law specifies that if residents fail to provide supporting documentation for their investment or for the redirection of collective investment fund holdings within established timeframes, the residency authorization without lucrative activity is annulled.
Elite athletes, artists, and scientists who qualify for “special interest” status retain access to the previous refundable deposit structure. Cantavella Soler notes this carve-out preserves Andorra’s ability to attract high-profile individuals in cultural and sporting fields.
The law also extends the non-refundable payment structure to residència activa per compte propi (self-employed residency). These applicants must pay €50,000 to the state, replacing the previous AFA deposit that applicants could reclaim.
For self-employed residents who establish companies to pursue high-tech activities in digital economy, entrepreneurship, or innovation, the law waives the €50,000 payment. The bill defines digital economy as that part of economic production derived solely or principally from digital technologies with business models based on digital goods or services.
Pre-Approval Applications Escape New Requirements
The Democrats for Andorra, who hold an absolute majority in parliament, secured the bill’s passage. Opposition amendments seeking to maintain lower thresholds and modify the non-refundable payment structure failed during committee review.
Applicants who submitted foreign investment authorization requests before parliamentary approval on January 22 will follow prior regulatory requirements.
Cantavella Soler confirmed that authorities will process pending applications for foreign investment or quota reservations under the earlier framework if applicants filed before the bill’s approval.
The law grants a six-month transitional period for foreign investment real estate tax provisions. Applicants who can prove that, before this law’s approval, there was an agreement of wills regarding the purchase of real estate will follow previous tax rates. Applicants must also demonstrate an economic transaction between the parties, proving both elements conclusively.
The government must submit consolidated texts of all modified laws to parliament within six months of the law’s enactment.
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