Andorra: in search of qualified foreign investments
There is no doubt that openness to foreign investments, which began in Andorra in 2012, has had a highly positive evolution and today represents 18% of the country’s GDP. There are various reasons for this success, that are beyond the competitive and homologated tax system. The quality of life in the country is incomparable in many senses, and this factor has invited many to choose this little country to be the country of their new residence. Nothing could predict a few years ago that Andorra would even consider stopping the arrival of new residents because of the oversaturation of demands and the effects it produced on the Andorran market. The lack of housing supply became the most exponent that has caused the native population to see the problem of finding a place to live even more aggravated, apart from the obvious inflationary effect of the demand being much higher than the offer.
Considering the situation, the Andorran Government has seen the obligation to react and to renounce the arrival of new foreign investors, who still are highly valued for the positive effects they have had on the Andorran economy. As a result, the regulations have been modified in a double sense. On the one hand, for investors who arrive to develop the digital economy, entrepreneurship and innovation, the regulatory framework was created to provide facilities and legal security. On the other hand, minimum economic conditions for the remainder, both for businessmen and for foreign beneficiaries, were updated by increasing the AFA deposit up to 50,000€ and for the others by increasing the minimum level of investments up to 600.000€.
Specifically, two new types of residence are created. One is for digital nomads, who do not need a specific geographic location to carry out their work, either on their own account or on behalf of others. The other type is visas for entrepreneurs —authorizations from the Ministry of Economy for those cases in which the specific program for entrepreneurs was promoted by said Ministry. In some cases, there is an exemption from the 50,000€ deposit and the minimum residence time in Andorra is reduced to 90 days.
Conversely, in the case of non-profit residences, the minimum investment obligation is increased to 600,000€. There is a one special aspect in this matter, that if you choose to invest in real estate, it should have a value of at least 400,000€. Precisely, this measure is aimed at avoiding speculation in certain real estate assets of lesser value and to favor that they remain accessible for the rest of the population. Additionally, the minimum amount to be invested is allowed to be 400,000€ in the case of allocating an investment in the government’s Housing Fund. Its objective is to build or rehabilitate homes at an affordable price for that part of the population that demands it.
For practical purposes, there are changes, perhaps with the most noticeable consequences, that increase AFA deposit from 15,000€ to 50,000€ and increase the percentage of minimum capital up to 34% for the rest of the cases. Also, to fit into the official modality for self-employed residents, entrepreneurs or businessmen, if they choose to bet on Andorra, are obliged to immobilize 50,000€, what in some cases could have dissuasive effects.
In any case, we must understand that despite the traditional welcoming spirit of Andorra, mechanisms such as those described can become useful to select those cases in which the commitment to successful Andorran scene is truly firm and provides a differential value. Meanwhile, the authorities must continue to strive to promote new real estate policies that improve access to decent housing for the country’s population that needs it. Who knows if in the end, whether it is the public initiative and/or the private initiative, national or international, this lack of housing supply can be solved, but it is clear that we must continue to pay attention to the needs of a citizenry that deserves it, despite where you came from, everyone contributes to making this wonderful country even greater.
The Management
Augé Legal & Fiscal
