Interest in Andorra as a business and residential destination has grown in recent years, driven by a legal framework that’s open to foreign capital.
If you’re considering setting up a company, relocating your business or applying for active or passive residency, it’s worth understanding the framework that regulates foreign investment in the country.
This article explains what is considered foreign investment, how it’s regulated, and the different types that exist.
Table of contents:
- The legal framework for foreign investment in Andorra
What is foreign investment in Andorra?
Foreign investment regulations under the Law on Sustainable Growth
How foreign investment works in practice
Key aspects to consider before investing in Andorra
Advantages for foreigners investing in Andorra
Foreign investment as a gateway to Andorra
The legal framework for foreign investment in Andorra
Andorra’s current foreign investment regime is based on Law 10/2012, which marked a turning point in the country’s economic development. Following its approval, foreigners could own up to 100% of the capital of an Andorran company, and a clear, regulated framework for international investment was established.
The law clarifies what constitutes foreign investment and who is considered a foreign investor, as well as setting out the types of investment that require prior authorisation. It also distinguishes between direct foreign investment and foreign investment in property, establishing the criteria for determining when a transaction must be subject to administrative control.
What is foreign investment in Andorra?
Foreign investment in Andorra encompasses corporate transactions that require prior authorisation, such as:
- The incorporation of a company
- The acquisition of more than 10% of the shares or holdings in an Andorran company
- The modification of companies
- Capital increases
- Acquisitions of property
A foreign investor is defined as an individual or legal entity that is not a resident of the country, or an Andorran company in which 50% or more of the capital is owned by foreign individuals or entities.
This definition sets out the procedures, authorisations and requirements that individuals must comply with when setting up a company or investing in real estate in Andorra.
Foreign investment regulations under the Law on Sustainable Growth
In 2025, Andorra took another step forward with regard to regulating foreign investment by approving the Regulation to implement Law 5/2025 on sustainable growth and the right to housing. This new framework aims to improve the control and transparency of foreign investment operations, particularly in the real estate sector.
To this end, the role of the Foreign Investment Register as a monitoring and supervisory tool is being strengthened to help ensure compliance with current regulations.
The Register provides greater clarity and legal certainty, ensuring that the inflow of foreign capital aligns with Andorra’s current objectives of achieving sustainable growth and balance in the property market.
How foreign investment works in practice
The regulations distinguish between two main channels, depending on your objective as an investor: direct foreign investment and foreign real estate investment.
Direct foreign investment
This is the most common way to set up a company or move your professional activities to Andorra. This occurs, for example, when a company is set up with foreign capital, a significant stake is acquired in an existing company, or a branch or permanent establishment is opened.
This type of investment is linked to active self-employment, as it enables you to undertake management roles and conduct business activities from the principality. Appropriate initial planning is essential in these cases, both at the corporate level and in terms of accounting, tax and labour management. Many companies choose to outsourcethis work to ensure regulatory compliance.
Foreign investment in property
Foreign real estate investment is particularly relevant when the objective is to establish residence in Andorra, as this is the main route for individuals applying for passive residence permits.
Due to strengthened administrative controls introduced in 2025, an analysis of the legal compliance and implications of any property transaction is strongly advised before formalising any acquisition.
Take some time to read our article on this topic:changes in foreign real estate investment in Andorra: what you need to know
Key aspects to consider before investing in Andorra
Before making a foreign investment in Andorra, certain determining factors should be carefully analysed:
- The most appropriate type of investment according to your personal or business objectives
- The relationship between investment and residence
- The optimal corporate structure, where applicable
- The tax impact and recurring obligations
- Medium- and long-term planning
A thorough preliminary assessment allows for a more streamlined process and reduces risks throughout the project.
Advantages for foreigners investing in Andorra
Beyond just the legal framework, the country offers a series of advantages that explain why an increasing number of international investors are coming here to develop their projects.
Attractive tax environment
Andorra offers a competitive tax framework, with both corporation tax and personal income tax having a maximum rate of 10%. Moreover, there are no taxes on wealth, inheritance or gifts, further streamlining business and personal tax planning.
Security and stability
The principality is notable for its high level of security and its solid, stable and well-regulated economic system.
Ideal environment for entrepreneurs and international companies
Its location between Spain and France, coupled with lower business costs than in neighbouring countries, makes Andorra an attractive option.
Foreign investment as a gateway to Andorra
Whether you want to set up a company, relocate your professional activity or establish your residence in Andorra, it is essential to understand what is considered foreign investment in the country. This is the factor that links investment, business structure and access to the various residence regimes.
In this scenario, specialist advice on company incorporation, taxation, accounting and residency procedures is essential to structuring your investment appropriately. This will also enable you to proceed with greater agility and certainty, ensuring that each decision aligns with your personal and professional goals.
Request a consultation with us so we can analyse your project and answer any questions you have about foreign investment in Andorra.