Vacant Housing in Andorra: The New Fiscal Landscape

In recent years, Andorra has seen a significant increase in housing demand, especially due to the arrival of new residents with high purchasing power and international investors. This pressure on the real estate market has made it difficult for local residents to access regular housing. In response, the Andorran government has introduced a specific fiscal measure: the Tax on Vacant Homes (IHV).

This article provides an in-depth analysis of the nature, objectives, legal framework, and implications of this new tax, as well as its potential medium- and long-term economic and social consequences.

Context and Rationale for the IHV

The Andorran real estate market is currently under considerable strain. A limited rental supply, speculative pressures, and the maintenance of vacant properties for investment purposes have led to sustained price increases. In this context, the government has decided to promote the effective use of available housing as a measure to combat the housing crisis.

The IHV was therefore created as a public policy tool to encourage the mobilization of vacant homes into the rental or sales market. It also aligns with principles of fiscal fairness: taxing those who keep underused resources in times of collective need.

Definition and Legal Basis of the Tax

The Tax on Vacant Homes is a levy introduced by the Law on Urgent Measures in Housing, passed by the Consell General of Andorra. It is an annual tax imposed on owners of properties that remain unoccupied for more than 6 consecutive months within a 12-month period.

Who must pay the IHV? All property owners, whether individuals or legal entities, whose properties are registered as vacant and who cannot prove effective use or justified inactivity.

Criteria for Defining a "Vacant" Home

According to current regulations, a home is considered "vacant" if:

• It has not been effectively occupied for more than 180 days in the year.

• It has not been rented or genuinely offered on the rental market.

• There are no valid reasons such as force majeure or poor habitability conditions (e.g., renovations, legal disputes, pending inheritance).

Exemptions:

• Homes used as second residences (with proven regular use).

• Newly built properties during the first year after obtaining the certificate of habitability.

• Homes temporarily ceded to NGOs or social organizations.

Calculating the Tax Liability

The tax amount is calculated based on the usable surface area of the property and a fixed rate by bracket. This ensures proportionality between the tax impact and the taxpayer's economic capacity.

Estimated rate example (subject to annual revision):

• Up to 60 m²: €10/m²

• 61 to 120 m²: €15/m²

• Over 120 m²: €20/m²

Thus, a 100 m² property considered "vacant" would pay approximately €1,500 annually.

Revenue Purpose and Use of Funds

Revenue from the IHV is not merely for fiscal collection but is specifically allocated to public housing policies and rental assistance programs. This designated use reinforces the social legitimacy of the tax and enhances its redistributive function.

Expected Impacts

Positive:

• Incentivizes rental of currently unused housing.

• Increases market supply, potentially moderating prices.

• Generates funding for affordable housing.

• Encourages property maintenance and rehabilitation.

Comparison with Other Countries

Andorra is not the first country to adopt such measures. Countries like France, Spain, and Canada already implement similar taxes to penalize vacant properties. In Barcelona, for instance, the City Council can impose surcharges of up to 150% on the local property tax (IBI) for unjustifiably vacant homes. This reflects a global trend to discourage underuse of housing in high-demand contexts.

How to Comply with the Tax on Vacant Homes (IHV)?

To avoid penalties and ensure compliance, owners of properties potentially subject to the IHV must follow these steps:

1. Verify the property's status: Confirm whether your home meets the legal criteria for being considered "vacant."

2. Prove effective use: If the property has been occupied or offered for rent, retain evidence such as contracts, utility bills, or advertising records.

3. Register in the Vacant Property Register: To comply with this tax, owners must register their properties in the vacant homes registry. This must be done within two months after the property is legally considered vacant. Once completed, the administration assigns a Housing Identification Number (NIH) to the property.

4. Submit a declaration: Taxpayers must file a specific declaration with the Andorran tax authority, indicating location, surface area, and occupancy status.

5. Request exemptions where applicable: If there are justified reasons for vacancy, supporting documentation may be submitted to request exemption.

6. Pay the fee: If the tax obligation is confirmed, the amount must be paid within the official deadlines each year.

How Can PSF Help You?

 Its key contributions include:

• Personalized case analysis: We assess whether your property is subject to the tax and explore legal ways to justify its vacancy.

• Document management and filing: We handle the preparation and submission of all required documents to the tax administration.

• Tax optimization: We propose strategies to minimize your overall tax burden by making the most of your real estate assets.

The Empty Home Tax in Andorra represents a significant step towards a more socially oriented taxation, which seeks to encourage the efficient use of homes and guarantee the right to housing for the resident population. Its application must be careful, balanced and transparent to avoid unwanted effects and guarantee its social acceptance.

For more information you can contact us through the contact form.

The Plus Serveis i Família Team