Advantages of buying a property in Andorra
The main advantage for real estate buyers in Andorra: for this property you will almost not pay taxes.
Just like you will not pay tax on capital and payroll tax. Regardless of whether you are a resident or a foreigner, the authorities of the Principality of Andorra show remarkable loyalty in the tax sphere.
Among other things, buying a property in Andorra for more than 400,000 euros means getting a "passive residence permit" in the country. In the same neighboring Spain, the benefits of a "golden visa" can only be used when buying real estate worth 500,000 euros or more.
Another obvious advantage of buying a property in Andorra is a unique geographical location.
The Principality is close to such centers of Western European civilization and tourism as Barcelona, Girona, Toulouse and the French Riviera.
Andorra is a popular all-year-round resort, despite the lack of access to the sea.
Skiing entertainment is available to guests of Andorra for 5 months a year, water thermal spas are open all the time. At the height of summer, those who wish can reach the Mediterranean coast of Spain or France within a couple of hours.
Andorra is traditionally considered one of the centers of European shopping. Prices for many goods from local retailers by 20%, and even 30% lower than the average for Western Europe! The future for the majority of happy subjects of Andorra looks simple and cloudless. The Principality is 12th in the world according to the standards of life.
Although Andorra is not formally part of the European Union, citizens of the country can, in a few minutes, issue a Schengen multivisa for themselves in the Spanish consulate, carrying only a passport and a card of the resident of Andorra.
By the way, the card gives its lucky owners the right to free living in neighboring states.
The coming changes in the banking system
A well-known tax haven for wealthy foreigners, Andorra may soon change.
It is not at all because of the scandalous "revelations" of the Panama firm Mossack Fonseca, but for the simple reason that the principality is trying to get closer to another influential club - the European Union.
"We are aimed at integration with the European Union and the game by one rule. We modernize the structure of our economy in order to become competitive, and we need internal reforms to open up to the rest of the world, "said Foreign Minister Andorra Gilbert Saboya Sounia, one of the Western publications.
The Organization for Economic Co-operation and Development (OECD) fully agrees with the minister's opinion.
"Since 2007, Andorra has significantly increased the standards of transparency of the banking system, and is going to automatically exchange relevant information by 2018," Andrew Auerbach said at the OECD Global Forum.
New living conditions in Andorra
According to Andorran ministers, for today their country should diversify completely dependent on tourism and banks economy, implement hundreds of different EU standards, and at the same time try not to reduce the attractiveness of Andorra in the eyes of foreign real estate buyers.
In turn, the reforms should revive the economy and the weakened elite housing market in Andorra, which, after the World Economic Crisis of 2008, sank more than 30%.
One of the most important innovations is the profit tax, which appeared for the first time, but it turned out to be lower than most European countries.
The first € 24,000 of income of the resident of Andorra is not taxed, incomes up to € 40,000 are taxed at 5%, and everything that is higher is 10%.
Such traditional advantages for Andorra as the absence of an inheritance tax, a luxury tax and a capital tax remain in place. But there were additional advantages.
Now it became possible to obtain a "passive residency" after staying in Andorra for a total of 90 days. Almost the ski season lasts from mid-December to early April. Recall that applicants need to invest in the economy of Andorra at least € 400,000, including in the form of buying real estate.
"According to my personal feelings, the market was more optimistic. We observe an increase in the activity of foreign investors. Prices are also gradually growing, but so far only 2% per year, "says Thomas Kampfraat, executive director of the local branch of Engel & Völkers, the largest real estate broker, about the Andorran property market.
What to expect from real estate prices in Andorra?
Unlike nothing else from the rest of the West European countries, the property in Andorra is characterized by relatively low liquidity.
Check our review of the real estate market of Andorra - https://all-andorra.com/property-market-review/
It may take several years, until you sell any large object.
Nevertheless, the Principality of Andorra has been gaining strength for many years and is climbing to the top of investment attractiveness, thanks to which this situation may soon change for the better.
Residential property in Andorra has never been attractive in terms of acquisition for further rental. The profitability of such a business does not exceed 2.5%, which is very small on the background of the Mediterranean coast of Spain or France. This indicator has remained stable since the beginning of the World Economic Crisis.
From the point of view of investment it is much better to purchase commercial real estate in Andorra - it has long been a scarce sector of the local market. After the adoption of the "Investment Law" in 2012, the number of applications with such investments has increased dramatically, and this is only the beginning.
Andorra la Vella, the capital of the principality, retains the status of the center of economic life, shopping and tourism.
Here, about a third of the country's population is relatively densely populated, and therefore Andorra la Vella abounds with offers for the sale or lease of both residential and commercial real estate.
As for the capital and the neighboring spa resort of Escaldes-Engordany, the emphasis here is on replacing old private houses with first-class modern facilities.
Property in Andorra la Vella is prestigious and the price is appropriate
In some elite areas, prices did not fall even during the crisis.
Currently, a new 3-room penthouse in Andorra la Vella can be purchased from € 400-500 thousand. A spacious 4-room duplex in a modern bioclimatic building (center) will cost at least € 1 million.
Modest 1-2-room apartments in attractive districts of the capital cost at least € 200-300 thousand.
On the other hand, there is a small resort town Canillo (Canillo) in the midst of snow-capped mountain peaks. There are many apartments for tourists. In the small districts of Ordino and La Massana - popular centers for Mowintibike and hiking - you can find yourself remote mountain chalets.
Near Caldea (Caldea) - the largest open mountain resort in Europe - apartments and private houses are sold at fabulous prices. For example, in a modern glass complex near the sources, two-bedroom apartments with an area of 178 squares are sold for € 1.2 million - it's almost 6740 euros per meter!
Andre Canadaas, Sales Director of Sotheby's International Realty in the town of Encamp, says that the prices for some properties in Escaldes-Engordany can easily exceed € 10 million.
"Real estate on the sunny slopes of mountains usually costs more. Escaldes-Engordany, along with Santa Coloma and Can Diumenge, are experiencing a much higher price rise than the average for Andorra. Last year, real estate here has risen in price by at least 10%, "says Kanans.
According to local real estate experts, the Escaldes-Engordany secondary market continues to be in high demand from foreign buyers.
Most of these potential investors want to buy housing for personal use. Many are attracted by Andorra's tax policy, as well as stability.
One can not ignore the fact that older wealthy foreigners tend to settle in a calm state, where the level of crime is practically zero, where there is a developed infrastructure and very high standards of life in general.
Among European property buyers in Andorra, entrepreneurs and pensioners are clearly dominant. Local real estate agencies note a high interest from Russians, Americans, Chinese, and even people from the oil states of North Africa and the Middle East.
Recently, the share of so-called "qualitative inquiries" has increased, when potential buyers have a very high income and are interested in exclusive property in the best areas of Andorra.