Real Estate Investment · Asset-Holding Companies · Investment Planning
Andorra's real estate market continues to attract interest from local and international investors looking to acquire property, diversify their assets or develop long-term investment strategies.
However, before purchasing an apartment, commercial property or other real estate asset, an important question arises: is it better to buy property in your own name or through an Andorran company?
The answer is not always straightforward.
It depends on the investor's circumstances, the number of properties they intend to acquire, the purpose of the investment, their tax residence and how they plan to manage their assets in the future.
Establishing a company may offer certain organisational and asset management advantages. However, it also involves legal obligations, ongoing costs and regulatory requirements that should be carefully considered before making a decision.
At NEXORY GROUP, we believe that a well-structured real estate investment begins long before the property purchase agreement is signed.
1. What Is a Property-Holding Company in Andorra?
A property-holding company is a corporate structure primarily established to own, administer and manage real estate assets belonging to the company itself.
For example, a company may be incorporated to acquire one or several apartments, retain them as long-term investments and, where permitted by applicable regulations, generate rental income.
It is important to understand that a property-holding company is not necessarily a separate legal form.
In Andorra, this type of structure generally operates as a Limited Liability Company (SL) or a Single-Member Limited Liability Company (SLU), with corporate purposes adapted to the activities it intends to undertake.
The wording of the company's corporate purpose is particularly important, as it must accurately reflect the nature of its operations.
Managing property owned by the company is not the same as providing real estate brokerage services, managing properties on behalf of third parties or carrying out property development activities.
Each of these activities may be subject to different legal and administrative requirements.
2. Buying Property Personally or Through a Company: What Is the Difference?
Purchasing real estate in your own name generally involves a simpler administrative structure.
The individual becomes the direct legal owner of the property and assumes the corresponding obligations.
By contrast, when property is acquired through a company, the real estate belongs legally to the company rather than directly to its shareholders.
This distinction has important consequences.
The company owns its assets independently, must maintain accounting records and must comply with its applicable tax and administrative obligations.
Shareholders, meanwhile, own shares in the company rather than directly owning the underlying properties.
The choice of ownership structure should therefore be based on a clear investment strategy, rather than the assumption that incorporating a company will always result in tax advantages.
3. What Are the Potential Benefits of a Property-Holding Company?
A corporate structure may be particularly relevant when an investor has a medium- or long-term investment strategy.
Several potential benefits are worth considering.
Asset organisation
A company can bring multiple real estate assets together under a single structure, allowing for more coordinated management and clearly defined administrative procedures.
Investment with multiple shareholders
When several individuals wish to invest together, a company may facilitate the allocation of ownership interests and the organisation of decision-making.
Planning future investments
A corporate structure may help coordinate additional property acquisitions and the reinvestment of profits generated by existing assets.
Legal separation of assets
Properties belong to the company rather than directly to its shareholders. However, this separation does not eliminate potential legal responsibilities of shareholders or directors, nor risks arising from personal guarantees.
Continuity and asset management
A company may facilitate certain forms of corporate restructuring, succession planning or asset reorganisation, subject to the relevant legal and tax implications.
These advantages should always be assessed individually, as they may not be equally relevant to every investor.
4. What Are the Limitations and Ongoing Obligations?
Creating a company to acquire real estate also involves certain responsibilities.
An Andorran company must comply with applicable accounting, tax, registration and administrative requirements.
This may result in recurring costs associated with bookkeeping, tax filings, corporate maintenance and professional advisory services.
Furthermore, using a company does not allow investors to bypass real estate investment regulations or automatically obtain more favourable tax treatment.
In certain situations, particularly when acquiring a single property for personal use, direct ownership may be a simpler option.
Before establishing a property-holding company, it is therefore important to compare the overall costs and implications of both alternatives.
5. Foreign Real Estate Investment: A Fundamental Consideration
For non-resident investors, foreign investment regulations are among the most important matters to examine.
Andorran legislation regulates foreign investment in both companies and real estate.
Consequently, acquiring property through an Andorran company does not automatically exempt the transaction from restrictions or authorisation requirements applicable to foreign real estate investment.
It is necessary to assess the company's ownership and control structure, the nature of the property, the intended purpose of the acquisition and the legal conditions in force.
Investors must also consider whether the foreign real estate investment tax applies, together with any measures regulating access to the property market.
A corporate structure should not be used as a means of circumventing legal restrictions on real estate acquisitions.
Conducting a preliminary legal assessment can help determine whether the proposed transaction is feasible before entering into financial commitments.
6. Can a Company Purchase Apartments for Rental Purposes?
In principle, a company may consider acquiring properties intended for rental, provided that both the acquisition and the proposed activity comply with the applicable legal requirements.
However, it is essential to distinguish between different types of property use.
Long-term residential rentals, tourist accommodation, commercial leasing and other real estate activities may be subject to different regulations and authorisations.
The legal framework governing housing, foreign investment and permitted property use must also be taken into consideration.
Before purchasing a property with the intention of renting it out, investors should verify that the proposed use is legally permitted.
Projected investment returns should always be calculated on the basis of a realistic and legally authorised use of the property.
7. Taxation of Real Estate Investments in Andorra
Taxation is one of the central considerations in any real estate investment strategy.
In Andorra, the standard corporate income tax rate is 10%.
However, this figure alone does not determine whether purchasing property through a company is the most appropriate solution.
Investors should examine the tax treatment of rental income, deductible expenses, potential capital gains arising from a future sale and the taxation of profits distributed to shareholders.
Taxes and expenses associated with the acquisition itself must also be considered, together with any additional taxes applicable to foreign investment transactions.
Where shareholders are tax residents of other countries, further international tax implications may arise.
A property-holding company does not automatically guarantee tax savings.
In some circumstances, it may provide a suitable structure. In others, direct ownership may prove more efficient.
The decision should be supported by a financial and tax assessment tailored to the specific investment.
8. What Happens If the Investor Wants to Sell the Property?
An exit strategy should ideally be considered before making the initial investment.
Selling a property directly from a company is legally different from transferring shares in the company that owns the property.
Both transactions may involve distinct legal, tax and administrative consequences.
Transferring company shares is not necessarily a simpler alternative and does not automatically eliminate taxes associated with real estate transactions.
Furthermore, an investor's objectives may change over time.
They may decide to retain the properties for many years, sell part of the portfolio, introduce new shareholders or reorganise their investment structure.
For this reason, it is advisable to consider different future scenarios from the outset.
A well-planned investment should make sense not only at the time of acquisition but also when the assets are eventually sold or transferred.
9. Is It Worth Creating a Company to Buy One or Two Apartments?
This is a particularly common question among investors who wish to build a relatively small property portfolio.
Consider an individual planning to purchase two apartments in Andorra for long-term rental purposes.
Before deciding whether to establish a company, several factors should be examined, including the available budget, financing arrangements, the investor's tax residence, expected returns and the ongoing obligations associated with the corporate structure.
The feasibility of the acquisition must also be verified under the applicable real estate and foreign investment regulations.
In certain circumstances, a company may provide an effective framework for organising property assets.
However, when an investment involves only a limited number of properties, corporate maintenance costs and tax implications may make direct ownership a more appropriate option.
There is no universal solution: the right structure is the one that genuinely reflects the investor's objectives.
10. Why Planning Before Investing Is Essential
Real estate investment represents a significant financial decision.
When a project involves corporate structures, international investors or long-term asset management strategies, careful preparation becomes even more important.
Before committing to an acquisition, investors should assess the legal feasibility of the transaction, foreign investment requirements, ownership structure, financing arrangements and potential tax consequences.
It is also advisable to coordinate the different stages with the relevant professionals involved in the transaction.
The objective is to avoid situations in which a decision made primarily for tax or administrative reasons creates unexpected difficulties later.
A sound investment strategy requires a comprehensive understanding of the project and the obligations associated with it.
NEXORY GROUP: A Business-Oriented Approach to Real Estate Investment in Andorra
At NEXORY GROUP, we support entrepreneurs and international investors in structuring and developing their projects in Andorra.
Our approach begins with understanding each client's objectives and examining the available options before initiating administrative procedures.
We coordinate corporate formalities, foreign investment procedures and the preparation of the necessary documentation, working alongside the appropriate legal, tax, banking and notarial professionals.
We believe that a well-prepared investment requires more than simply choosing a legal structure.
It requires a comprehensive perspective, coherent planning and personalised support.
Are you considering purchasing property in Andorra through a company?
The NEXORY GROUP team can help you assess the initial stages of your project and explore which ownership structure may be most appropriate for your objectives.
NEXORY GROUP — Your Business. Our Commitment.
Editorial note: This article is provided for general information purposes and does not constitute individual legal or tax advice. Andorran regulations concerning foreign investment, housing and real estate transactions are subject to requirements and amendments that must be verified at the time of each transaction.