Andorra increases investment requirements for passive residence permits
The Parliament of the Principality of Andorra has approved a legislative initiative introducing significant adjustments to the conditions for obtaining a residence permit without the right to engage in professional activity (passive residence permit). The main change is an increase in the minimum investment threshold from €600,000 to €1,000,000. The law, approved on January 22, also transforms the program's financial terms, replacing the refundable deposit with a non-refundable government fee and introducing an alternative investment option through the Housing Fund of €400,000.
The regulation will enter into force the day after its official publication in the Official Gazette of the Principality, the date of which has not yet been announced. Before the final vote in parliament, the document underwent a review stage in the relevant committee from January 9 to 19, during which 43 amendments were considered. Following the commission's deliberations, nine amendments received unanimous support, twelve were adopted by a majority vote, and fourteen were rejected.
Key Aspects of the New Financial Model
The previous system required a refundable deposit of €48,500 to the Andorran Financial Authority (AFA) for the main applicant plus €10,000 for each dependent. These funds were fully refundable upon relinquishing residency status or obtaining citizenship.
Under the new regulations, applicants are required to make a one-time, non-refundable payment to the state of €50,000 for the main applicant and €12,000 for each dependent. The legislation clearly states the final nature of these payments. They are refundable only if the authorities refuse to issue the initial immigration permit. After notification of a positive decision, the funds are transferred to the Ministry of Finance, where they are retained for the benefit of the state.
Investment Requirements and Eligible Assets
The investment of €1,000,000 must be made on a permanent basis in assets related to the Andorran economy. The law provides the following list of eligible instruments:
non-refundable deposits;
real estate in the Principality;
equity shares in Andorran companies;
debt or other financial instruments issued by Andorran entities;
collective investment funds regulated by local law;
government bonds;
life insurance products issued by Andorran insurers.
Investments through collective funds are subject to a 36-month limit. After this period, the investor is required to reinvest the funds in other approved Andorran assets to meet the program requirements. Reinvestment must be documented in accordance with the regulations.
If real estate is part of the investment portfolio, the value of each acquired property must exceed €800,000.
Alternative Option through the Housing Fund
Alternatively, applicants have the right to reduce the total investment amount to €400,000 by directly or indirectly, but consistently and effectively, investing in the Housing Fund. According to the law, this fund is a public-private partnership focused on the development of affordable housing projects and operates under special regulations.
Procedural Deadlines and Consequences of Failure
Applicants have six months from the date of registration of their immigration permit application to implement the investment conditions. This period may be extended for an additional six months if the applicant proves that the investment was not completed due to force majeure or the actions of third parties. After this period, documents confirming the investment must be submitted.
The regulation stipulates that failure to provide evidence of investment or reinvestment of funds from collective funds within the established deadlines will result in the revocation of the non-profit residence permit.
Final and Transitional Provisions
It is important to note that all applications for foreign investment permits submitted prior to the parliamentary approval of the bill on January 22 will be processed in accordance with the provisions of the previous regulation. According to confirmed information, the authorities will process such pending applications, including quota reservations, under the old system.
A six-month transition period has been established for the provisions concerning the tax on foreign investment in real estate. Applicants who can prove a preliminary agreement to purchase real estate concluded prior to the adoption of this law will be subject to the previous tax rates. Documentation is required to confirm both the agreement itself and the economic basis of the transaction between the parties.
Within six months of the law's entry into force, the government is required to submit to parliament the consolidated texts of all legislative acts amended as part of this reform.
If you are planning to obtain a residence permit, invest in a country's economy, open a business in the EU, or purchase real estate abroad, we invite you to a consultation with our firm. During a personal online meeting, we will thoroughly examine your questions and create a step-by-step action plan for you.