How to successfully apply for foreign investment in Andorra
Setting up a company in Andorra, acquiring a stake in a company or purchasing real estate may seem relatively straightforward when looking only at the country's size or tax environment. In practice, foreign investment in Andorra needs to be carefully prepared. The key point is not to view foreign investment authorization as a mere administrative formality. The Andorran authorities examine the nature of the project, the identity of the investor, the origin of the funds and, depending on the circumstances, the investment's actual impact on the country.
The framework has also changed significantly in recent years. Law 5/2025 of March 6, 2025 (the Omnibus Law) and its implementing regulations have strengthened oversight of foreign investments and the focus on projects involving genuine economic activity. For certain new investments, investors must notably be able to demonstrate that they are effectively carrying out an economic activity within 18 months of the authorization being granted.
Why invest in Andorra?
Andorra has attracted entrepreneurs and international investors for several years. Its proximity to France and Spain, its economic environment, safety and quality of life explain part of this appeal. Andorra Business, the country's economic promotion and development agency, also supports both local businesses and foreign investors with their establishment and development in the country.
Taxation is naturally one of the factors considered by investors, but it should never be the sole reason for establishing a business or relocating. For an individual who is tax resident in Andorra, the personal income tax (IRPF) rate is 10%, with a tax reduction mechanism applying in particular to certain income brackets. The general IGI rate, Andorra's equivalent of VAT, is 4.5%.
These rates do not, however, mean that a foreign investor will automatically benefit from this tax treatment on all of their income. Tax residency, the source of income, a company's ownership structure, activities carried out in several countries and applicable tax treaties can significantly affect the outcome.
Andorra has tax treaties designed to prevent double taxation with several countries, including France and Spain. These treaties can become particularly important when an entrepreneur retains business activities, income, ownership interests or assets in their country of origin.
This is why a serious project generally begins with a comprehensive economic and tax analysis: what do you actually want to develop in Andorra, where will your customers be located, where will the activity be carried out, where will you live and how will the income be generated? The answers to these questions often matter more than simply choosing a legal structure.
What is a foreign investment application in Andorra?
Foreign investment covers several different situations. It may involve setting up an Andorran company, acquiring or increasing an ownership interest in a business, investing in real estate or carrying out certain other transactions falling within the scope of the regulations.
It would be inaccurate to state that the same procedure automatically applies to every foreign individual and every investment. The requirements depend on the nature of the transaction, the investor's status, whether they are a resident or non-resident and the sector concerned.
In the typical case of a non-resident foreign entrepreneur wishing to establish a commercial company in Andorra, the official process notably requires obtaining foreign investment authorization before incorporation before a notary. The Government also states that the application can be submitted to the administration or electronically.
This authorization allows the administration to identify the investor, assess the proposed structure and understand the substance of the project. The review also covers broader considerations. The regulations that came into force in 2025 notably provide that the Foreign Investment Registry assesses whether the transaction poses a risk to national security, public or economic order, the environment, public health, access to certain resources, sensitive information, the labor market, housing or the country's general interest.
This development is significant. A convincing application is therefore not simply an application that is administratively complete. It must also make it possible to understand who is investing, with what funds, in which activity and for what economic purpose.
How to prepare a strong foreign investment application
Preparation begins well before the application is submitted.
The investor must be able to clearly explain their project. If they intend to establish a company, the company's purpose, activities, financing and organization must be coherent. A structure created solely on paper, with no identifiable activity or clear economic rationale, will naturally be more difficult to justify than a well-documented project.
The source of funds is also a key consideration. Banks, notaries and authorities may request documents explaining how the capital was accumulated. The best approach is to prepare a clear, chronological record: professional income, sale of a business, savings, dividends, inheritance, sale of real estate or another lawful source of wealth. The clearer this chain is, the less likely the verification process is to result in additional requests for information.
It is also important to ensure consistency between the various documents. The amount stated in the project, the capital contributed, the information provided to the bank, the beneficial owners and the declarations submitted to the administration should not tell different stories.
When incorporating a company, the Government notably provides for obtaining an administrative identification number for the non-resident foreign national, reserving the company name, obtaining foreign investment authorization, depositing the capital and then incorporating the company before a notary. The minimum share capital currently indicated by the administration is €3,000 for an SL and €60,000 for an SA.
The SL is generally suited to small or medium-sized entrepreneurial structures. The SA is more appropriate for projects requiring greater capital or a more developed shareholder structure. However, the choice should not be based solely on the minimum capital requirement: governance, number of shareholders, future financing, transfer of shares and taxation should also be considered.
What happens after authorization?
Obtaining authorization does not necessarily mark the end of the review process. The foreign investment regulations adopted in 2025 have specifically strengthened the monitoring of projects after approval. New investments covered by the regulations must be able to demonstrate the existence of effective economic activity within 18 months of authorization. The administration may notably examine the actual commencement of the activity, turnover and compliance with accounting and tax obligations. This is particularly important for an entrepreneur considering setting up a company in Andorra.
It is not enough to legally incorporate the company and deposit the capital. The project must then become a reality: establishing the business activity, organizing the accounting, completing the required filings and being able to demonstrate that the company genuinely corresponds to the project presented in the application. This approach also reinforces the importance of having a realistic business plan. It is better to present cautious, defensible assumptions than a spectacular project that cannot subsequently be implemented.
Foreign real estate investment: a much stricter framework
Real estate deserves particular attention, as it is probably the area of the regulatory framework that has changed the most in recent years.
Today, it would be misleading to present foreign real estate investment in Andorra as a market that is simply accessible thanks to an attractive tax system. Since 2024, and subsequently with the reforms introduced in 2025 and 2026, the country has strengthened the restrictions and taxation applicable to certain foreign real estate acquisitions.
The 2025 law notably restricted foreign investors' purchase of residential properties and imposed greater regulation on foreign real estate development. The Government explains that this policy is intended, among other things, to better protect the housing market and direct certain investments toward projects considered beneficial to the country.
Taxation has also changed. Since the new measures that came into force in February 2026, the foreign real estate investment tax rate has notably been increased to 6% for the acquisition of a first property and to 10% in the case of the purchase of a second home, depending on the situations covered by the regulations. However, specific mechanisms and exemptions may apply, particularly when the real estate investment is linked to certain economic activities.
The actual cost of a real estate investment must take into account the purchase price, any tax applicable to the foreign investment, formalization costs, future taxation of income or resale proceeds, and the restrictions applicable to the transaction in question. For a real estate investment, prior legal due diligence is now essential.
Andorran taxation: attractive does not mean automatic
One of the most common mistakes is to reduce an investment project in Andorra to a few tax rates. Andorran tax rates remain competitive in many cases, but the real question is which tax regime applies to your situation. Someone who establishes a company in Andorra while continuing to live and conduct most of their business in France or Spain is not in the same situation as an entrepreneur who genuinely transfers both their residence and business activity to the Principality. Tax residency must therefore be carefully assessed. It cannot be established simply by opening a company or a bank account.
It is also necessary to analyze the flows between the company and its director, remuneration, dividends, income received abroad and any interests held in other countries. The double taxation treaties concluded by Andorra, particularly with France and Spain, are specifically intended to determine in which country certain categories of income may be taxed and to prevent the same situation from being taxed twice under the conditions provided for by these treaties.
Why is the source of funds so important?
A foreign investment generally involves several levels of scrutiny. The bank may request supporting documents before agreeing to open an account or accept the capital deposit. The notary must have the necessary information to formalize the transaction. The administration, for its part, reviews the investment's compliance. An investor whose funds are entirely legitimate may therefore still encounter difficulties if their source is poorly documented.
Consider a simple example. Someone sold their business several years ago and now wants to reinvest part of the proceeds from that sale in Andorra. Providing only a bank statement showing the available balance does not tell the whole story. The sale agreement, the corresponding tax documents and bank transactions tracing the funds make the application much easier to understand. This preparation work may not be particularly exciting, but it is precisely what helps prevent many administrative obstacles.
Should you seek professional assistance when investing in Andorra?
It is possible to complete certain procedures directly with the administration, and several procedures are available online. For company incorporation, the Government also provides details of the various official steps and required documents.
However, as soon as a project involves several shareholders, foreign companies, a real estate investment, a change in tax residency or significant international flows, assistance from a local professional becomes particularly useful.
A lawyer handles the legal structuring and compliance of the project. The notary is involved in formalizing certain transactions. A tax advisor analyzes the tax implications in Andorra and, where they have the relevant expertise, how these interact with the investor's international situation. An accounting professional can then ensure that the company complies with its reporting obligations. The goal is not to involve as many intermediaries as possible, but to know who needs to validate each part of the project.
For institutional and economic matters, Andorra Business is also an official point of contact specifically intended, among other things, to support foreign investment and the establishment of new businesses in the country.
What mistakes can weaken an application?
The most difficult applications are not necessarily those involving the largest amounts. Problems often arise when one piece of information is inconsistent with the rest of the project. An activity described too vaguely, financing that does not correspond to the declared assets, a corporate structure that is difficult to understand, an insufficiently documented source of funds or a real estate project started before the necessary authorizations have been verified can significantly delay the process.
Another mistake is to build the project entirely around taxation. Since the 2025 reform, the authorities’ stated approach has also been to verify the project’s economic substance and value, with monitoring that may extend to requiring proof of effective economic activity within 18 months of authorization.
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How much time should you allow?
It is preferable not to work from a single fixed timeframe. The duration depends on the project, the quality of the application, the time required to obtain foreign documents, bank checks, any translations, the investment authorization and the availability of the various professionals involved.
Setting up a company is not simply a matter of waiting for a response from the administration. The reservation of the company name, foreign investment authorization, opening the account intended for the capital, preparation of the notarial deed and registration of the company must all be coordinated.
The Government’s official process confirms this sequence of steps. For this reason, it is safer to build a timeline based on the date when the business activity must actually begin, while allowing some flexibility for requests for additional information.
How can you maximize your chances of success?
A successful foreign investment application is, above all, one that is easy to understand.
The administration must be able to identify the investor, understand what they intend to do in Andorra, establish the source of their financing and verify that the project complies with the legal framework. The bank and notary should find the same logic in their own checks. When these elements are consistent, the process naturally becomes easier to follow.
Conversely, trying to move too quickly can cost a great deal of time. Signing commitments before verifying whether a real estate investment is eligible, creating an unnecessarily complex international structure or preparing proof of funds at the last minute can turn a relatively straightforward relocation into a difficult application. The right approach is to define the economic project first, then verify its legal and tax treatment, and only afterward begin the procedures and make significant expenditures.
Investing in Andorra in 2026: key takeaways
Andorra remains an attractive destination for many entrepreneurs and investors, but its foreign investment framework is now more tightly regulated than it was a few years ago.
The Omnibus Law has strengthened the oversight and monitoring of investments, while the measures that came into force in 2026 have notably increased the taxation applicable to certain foreign real estate transactions. This does not make foreign investment inaccessible. It simply means that a project must be built on more than the promise of low taxation. An entrepreneur who can explain their business activity, demonstrate the source of their funds, present a coherent structure and comply with the obligations following authorization starts from a much stronger position.
Before making any major decision, it remains advisable to verify the regulations applicable at the time of submission with the Government of Andorra and, where the legal or tax implications warrant it, have the situation reviewed by a qualified professional.
