The Council of Ministers has approved today, in an extraordinary session, upon the proposal of the Minister of Presidency, Economy, Labor, and Housing, Conxita Marsol, the temporary suspension of foreign investment authorizations in real estate. The measure will be processed immediately with the aim of being discussed and voted on by the General Council next Thursday, September 7.

In response to a significant increase in foreign investment in real estate in Andorra and to ensure sustainable growth, the Government, fulfilling a prominent point in the electoral program, also seeks to directly channel the economic capacity of this foreign investment into the State through a tax that will soon be imposed on foreign investment in real estate. Until this milestone is achieved, and to prevent a sudden withdrawal of potential investors in this regulatory deadlock, the Government has chosen the approach of submitting the Law Project for the suspension of foreign investment in real estate in the Principality of Andorra this Tuesday, and it will be processed—according to Article 60.1 of the Constitution—with extreme urgency and necessity. The goal is to discourage speculative real estate transactions.

This was emphasized by the head of the Government, Xavier Espot, who held a press conference alongside Minister Conxita Marsol. At the same time, the Minister of Presidency, Economy, Labor, and Housing framed the moratorium as a specific measure that will contribute to addressing the country’s issue of a lack of affordable rental housing. It is seen as a necessary preliminary step this fall before the establishment of a tax on foreign investment in real estate.

The Government plans to implement a tax on foreign investment in real estate, which will be used to promote measures benefiting citizens, such as infrastructure, economic diversification projects, or the increase of the public rental housing stock. Simultaneously, efforts will be made to implement a tax for those foreign investors who divest in Andorra within a specified period.

While the tax is being established, the intention is to work on updating the Foreign Investment Law and present it during the first quarter of 2024. The Government has communicated the measure to parliamentary groups, offering an extended hand to gather contributions for the modification of the Foreign Investment Law. In this regard, Xavier Espot explained that the decision was made to adopt the moratorium while the tax that foreigners wishing to invest in real estate will have to pay is established. Simultaneously, they will work on amending the law through a participatory and inclusive project.

During the press conference, the head of the Government appealed for the collaboration and statesmanship of all parties to obtain capacity studies that will determine the limits to be established regarding real estate construction and ensure the sustainability of the country.

Official Source: