Andorra enacts Law 2/2026 introducing major changes in immigration and taxation
On February 13, 2026, Andorra's Law 2/2026 came into effect, bringing significant reforms to the country's immigration policies, foreign investment regulations, and taxation system. This comprehensive legislation aims to promote sustainable growth and align Andorra's legal framework with international standards.
Key Changes in Immigration
The new law introduces several notable amendments to immigration policies:
- Non-Refundable Payments: Applicants for self-employment residence permits and residence permits for individuals without lucrative activity are now required to make non-refundable payments to the Andorran Financial Authority (AFA). The amounts are set at €50,000 for the main applicant and €12,000 per dependent for non-lucrative activity permits.
- Exemptions: Exemptions from these payments are maintained for projects in the digital economy, entrepreneurship, and innovation sectors. Additionally, activities with high technological added value are now included in the exemption criteria.
- Enhanced Oversight: The law broadens the grounds for refusal and revocation of authorizations, strengthening controls to prevent fraudulent activities and ensure compliance with immigration regulations.
Revisions in Foreign Investment
Law 2/2026 also revises foreign investment requirements:
- Increased Investment Threshold: The minimum investment required for residence without lucrative activity has been raised from €600,000 to €1,000,000 in Andorran assets.
- Diverse Investment Options: The law reintroduces the possibility of investing in Andorran debt instruments, financial instruments, and collective investment schemes for a maximum period of 36 months, providing investors with more flexibility.
Taxation Reforms
While specific details on taxation reforms are not extensively outlined, the law indicates a move towards aligning Andorra's tax policies with international standards, potentially affecting corporate taxes, personal income taxes, and real estate taxation.
Implications for Stakeholders
These reforms are expected to have several implications:
- For Investors: The increased investment threshold and diverse investment options may attract high-net-worth individuals seeking residency, while the non-refundable payments could deter speculative applications.
- For Businesses: Enhanced oversight and stricter compliance measures may require businesses to adapt their operations to meet the new regulatory standards.
- For the Economy: By promoting sustainable growth and aligning with international standards, Andorra aims to enhance its economic stability and attractiveness as a destination for investment and residency.
Stakeholders are encouraged to consult the full text of Law 2/2026 and seek professional advice to understand the comprehensive impact of these reforms.
