Temporary Suspension of Foreign Investment in Real Estate Comes into Force in Andorra

Last Friday, 22 September, Law 16/2023 on the temporary suspension of foreign investment in real estate in the Principality of Andorra entered into force.

With the entry into force of this law, the granting of new foreign investment authorisations for real estate in the Principality of Andorra is suspended.

The suspension will remain in effect until the package of measures that the Government intends to implement in the coming months enters into force, including a tax on foreign investment in real estate.

Who Is Affected by the Suspension?

The suspension applies to the following persons and entities:

• Foreign non-resident individuals.

• Foreign legal entities.

• Andorran companies with foreign capital participation, regardless of the percentage of foreign ownership.

Important Clarification

Real estate investments carried out by Andorran companies with any percentage of foreign participation in their share capital are also suspended.

Transitional Regime for Ongoing Investments

The law provides for a transitional regime to avoid harming investments that had already been initiated.

Applications Submitted Before the Law Entered into Force

Applications for foreign investment in real estate submitted before the law entered into force may continue to be processed in accordance with the regulations in force at the time of submission.

Transactions Initiated Before 5 September 2023

Foreign investors who can prove that, prior to 5 September 2023, there was an agreement regarding the purchase of a property and that a related financial transaction had been completed before that date, will have their applications processed in accordance with the regulations in force before 5 September 2023.

Both the agreement and the financial transaction must be duly evidenced.

What Happens to New Applications?

Applications for foreign investment in real estate submitted while this law remains in force and which do not fall within any of the transitional situations described above will be automatically rejected and deemed not to have been filed.

Monitoring Future Regulatory Developments

ABAST will continue to provide updates and further details regarding any future developments arising from this legislation.