Andorra Ends 2025 with €88M Fiscal Surplus Despite Housing Tax Shortfalls

Andorra's government has reported a strong fiscal close to 2025, with an overall surplus of 88 million euros, driven by robust performance in key taxes despite some setbacks.

The foreign property investment tax, introduced to curb overseas purchases amid a housing crisis, collected 19.18 million euros last year—more than double the 9.35 million budgeted by the Finance ministry and a 41% rise from 13.6 million in 2024. This surge underscores sustained demand from non-residents, countering the measure's intended deterrent effect. Property transfer taxes also jumped to 4.3 million euros, up 58% from 2.7 million the previous year and exceeding the 3.1 million forecast, signaling heightened market activity and rising transaction values.

Indirect taxes as a whole reached 364.8 million euros, a 3% increase from 354.3 million in 2024. The IGI sales tax led the gains, liquidating 185.7 million euros—a 13% or 20.8 million rise—reflecting steady economic growth, stable prices, and stronger business activity. Offsetting this, consumption taxes fell sharply to 91.7 million euros, down 18% or nearly 20 million, due to lower import volumes and a one-off rush of pre-2024 rate hikes. Gambling taxes climbed to 2.2 million euros from 0.5 million, boosted by prior-year casino revenues.

A tax on vacant properties yielded just 42,875 euros despite a recent hike to 100 euros per square metre under the Sustainable Growth and Housing Rights Law, covering only 428 square metres of housing. Meanwhile, the former capital gains tax on property sales, which raised over 25 million euros in 2024, has merged into income taxes like IRPF and corporate tax, obscuring trends in speculative deals.

Immigration data from the Andorran Financial Authority (AFA) shows rising inflows of passive residents and self-employed individuals. Registrations for passive residency—those without paid work—totalled 383, up 25% from 308 in 2024, yielding a net gain of 187 after 196 departures. Self-employed permits hit 417, a 57% jump from 265, with a net addition of 321 following 96 exits. These trends swelled AFA-managed deposits: passive funds rose from 110 million to 123 million euros, self-employed from 35 million to 56 million. From 2026, these will shift to non-refundable contributions.

The AFA ended 2025 with an 8.9 million euro surplus, up 30% from 2024, aided by interest from a matured French bond. Patrimonial income fell to 6.9 million euros amid lower rates, while fees rose to 3.9 million.

Other highlights include 10.7 million euros in patrimonial revenues, up 27%, with 8.4 million from FEDA dividends. The government allocated 52.7 million euros to the Social Security Fund (CASS) to cover deficits, part of 101.8 million in health spending, and faces potential litigation costs of 650,696 euros.