European Central: Navigating A Changing Policy Landscape in Andorra
Like countries of all sizes, Andorra is changing in an effort to keep up with the times. Situated in the Pyrenees Mountains with France to its northern border and Spain to its southern, the nation only about half the size of New York City has moved to take up more space in the expanding global digital and remote economy, advocating and implementing policies that attract foreign wealth as well as those seeking digital nomad visas, tech sector investment, and tax breaks. But who, in particular, is Andorra attracting through what policies, and how are these policies and migration impacting the economy, locals, and daily life?
What Are The Policy Changes That Andorra Has Made?
Historically a safe-haven for the uberwealthy in taxes and banking, Andorra has transformed itself since 2015, which witnessed the scandal that was the Banca Privada d'Andorra crisis. In the 10 years since, Andorra has aligned itself with international tax standards, relaxed restrictions to further open itself to foreign investment, launched a digital nomad visa avenue to residency, and moved to strengthen sectors outside its traditional tourism and banking establishments — in short, the nation has undertaken an economic reinvention.
Numerous historic pieces of legislation have been passed in Andorra to enable this reinvention. Only months before the BPA crisis shook the Andorran banking establishment and economy, Andorra began negotiating the terms of an Association Agreement with the EU to integrate into its single market. In continuing to pursue that agreement in the years since, Andorra has pushed to radically reform its historically opaque banking industry into a nationalized system operating in conjunction with international transparency and cooperation standards. Taxes were subjected to similarly intense reforms, with Andorra — once known as a tax-haven with taxes historically near zero — introducing a personal income tax capped at 10% in 2015; corporate income tax beat it only by a few years, emerging in Andorra in 2011. Tax agreements with other European lands were also normalized. In addition, the economy was opened to foreign investment, lifting the heavy restrictions of 20 years of residency, though, as of 2026, foreign investment and property buying would once again be restricted.
Who Is immigrating To Andorra?
Though the elite can no longer rely on a tax haven in Andorra, they have remained attracted by the opportunity created by the economy’s new openness to foreign investment, as well as the potential for passive residency assuming they satisfy investment and income requirements. The wealthy, along with celebrities and influencers who buy up large swaths of land, have been noted as a contributing factor to limited housing availability, in addition to the increase in population increasing demand.
As of 2025, only 39.1% of the population held Andorran citizenship, meaning over 60% of the principality had an immigrant background; other European nations have historically acted as primary sources, with Spanish, Portuguese, and French nationalities making up the largest individual shares of the population behind Andorran. The trend in European ex-pats dominating immigration to Andorra has continued during the recent immigration influx, but the specialization of workers and their roles in Andorran industries has changed. While many still find employment in the service industry as was common in Andorra prior to their economic expansion, skilled workers are increasingly seeking employment in the growing Andorran technology and specialized manufacturing sectors.
What Impact Has This Brought On Andorran Society?
When looking at the fiscal impacts of Andorra’s economic and immigration policy changes, the numbers are promising on the surface. Andorra’s GNP has grown from $2.79 billion in 2015 to approximately $4.04 billion in 2024, an increase of nearly 45%. On a more individual scale, gross average monthly income has also increased from roughly $2,200 in 2015 to $2,781 in 2024.
However, as economic and migration policy changes have helped usher in a significant increase in migration into Andorra since 2015 and attract foreign workers and wealth to its expanding industries, an affordability crisis has taken hold. With a much higher than average 65% of residents of Andorra residing in rented dwellings as of 2019, creating a high demand, coupled with a sharp lack of availability of units offered at affordable prices and an increasing population, the cost of living and housing in particular has shot up; real estate prices alone have risen more than 30% since 2018, and inflation hit 5.5% in 2023, mirroring trends in neighboring Spain, where real estate prices have risen 33% since the Covid-19 Pandemic. Those primarily affected by the increasing Andorran housing crisis are renters and those with immigrant backgrounds and lower levels of education and economic mobility; in a survey conducted in the first half of 2023, 67 percent of the population believed that housing affordability needed to improve.
The Andorran government has undertaken responsive policy measures to address these issues: the minimum wage has been raised, restrictions on foreign property buying and investment have been expanded following their historic loosening, and the building of new public housing units has been put into motion. As of 2026, new economic and immigration policy deemed the “Omnibus Law” was passed, aiming to tighten regulations on immigration, self employed and passive residency, foreign investment, as well as combat the persistence of the affordability and housing crises and ensure sustainable expansion. However, while these measures have somewhat helped buoy those in need of relief in Andorra, the deeper problem still remains— a crisis of affordability in the midst of their economic expansion.
