Key points

  • Transfer of an existing property: 4% ITP in total — 1% for the Govern, 3% for the parish.
  • New property bought from a developer: the 4.5% IGI (Andorra's VAT equivalent) applies instead of ITP.
  • Real estate capital gains: a scale that decreases with the holding period — around 15% for a resale within a year, stepping down over the years, to exemption for long holdings; the regime is integrated into direct taxes (IRPF for residents, IS for companies, IRNR for non-residents).
  • Non-resident seller: the buyer must apply a 5% withholding on the price as an advance on the seller's capital gains tax.
  • Since 2024, foreign real estate investment also bears a dedicated tax (Llei 3/2024) — covered in a separate article.

What do you pay on completion day?

For an existing property, the transfer bears the property transfer tax (ITP): 4% of the price, split between the State (1%) and the parish (3%). For a new property sold by a developer, the logic switches: the transaction falls under IGI — the general indirect tax, Andorra's functional VAT — at 4.5%, and ITP does not apply. The half-point difference is rarely decisive; correctly qualifying the transaction at the promise stage is.

How is the resale gain taxed?

Andorra taxes real estate gains on an explicit principle: discourage quick flips, reward long holding. The scale decreases with the holding period — around 15% when resale occurs within a year, then stepping down year after year, to exemption for long holdings. Since the direct tax reform, the regime works through IRPF (residents), IS (companies) and IRNR (non-residents), which sets specific rates by holding period.

Why does the buyer withhold 5% from a non-resident seller?

It is a collection guarantee: when the seller is not an Andorran resident, the law requires the buyer to withhold 5% of the price and remit it to the administration as an advance on the seller's capital gains tax. The balance is then settled — in either direction. In a structured operation, that withholding belongs in the exit cash-flow plan, not on signing day.

What this means for a holding vehicle

Andorran figures are low by European standards — 10% corporate tax, 4% ITP — but the system is coherent: it taxes entry moderately, quick exit heavily, long holding not at all. A vehicle that holds to build, operate and transmit works with the system; a short-rotation vehicle works against it. Our Andorran practice is built on the former. Article d'information générale, vérifié à la date de publication. La réglementation évolue : chaque opération appelle l'analyse de conseils locaux habilités.