According to EU Helpers, Andorra, a microstate located between Spain and France, is well known for its ski resorts, pleasant summers, and practical tax incentives, which draw hundreds of foreign investors to this "tax haven."
Between October 2022 and March 2023, the price of real estate in Andorra increased by 13%, and in the previous year, the government accepted almost 500 real estate applications, resulting in investors purchasing homes for up to €183 million.
Three-month ban on foreign investments in an effort to address the housing crisis
The Andorran government imposed a three-month embargo on international investments, which was later replaced by a tax on all purchases of foreign real estate.
Instead, the tax money will be invested in more reasonably priced rental housing. With an average price of up to €4,700 per square meter, Andorra is more expensive than most neighborhoods in Barcelona.
On the other hand, Andorrans may find it difficult to make ends meet in their own country due to a very low minimum income of €1,300, and purchasing a home in this microstate may cost three to four times as much as the monthly minimum wage that members of the working class earn.
Investors may still apply for residency permits because the restrictions only apply to non-residents. One simply needs to spend 90 days there each year in order to qualify as a "passive resident" in Andorra. Even if a foreigner cannot work for an Andorran company with this permit, the scenario is great for digital nomads who earn money from different parts of the world.
Passive residents must have contributed roughly €600,000 to the nation, the most of which must be put into real estate. However, if the applicant is also making money elsewhere, this condition may be removed.
Ban to Push Catalan Language Competency Requirements Further
The current prohibition will not only restrict investments to Andorra but also make it more difficult for people who want to buy property there because a resident permit in the nation requires linguistic fluency.
Holders of residency permits in Andorra will have to demonstrate their ability to converse in basic Catalan beginning in 2024 in order to renew their permits. A 30-hour Catalan education will be required of candidates as the nation works to protect its language.
Outsiders have criticized the situation and sparked discussion about it, and some public figures have even questioned whether Andorra is not a dictatorship.