Vacant Property Tax (IHB) in Andorra

Welcome to the WIT Andorra blog! In this post, we will explain the Vacant Property Tax (IHB) in Andorra, legislation designed to mobilize properties that remain unoccupied and how this affects both owners and investors. Additionally, we will highlight how WIT Andorra can assist you in turning this fiscal obligation into a strategic opportunity.

What is the IHB?

The IHB is a tax imposed on properties that have been unoccupied for at least two years up to 12/31/2022 and one year from 01/01/2023 without an accepted justification, such as their use for economic activities or as the owner’s primary or secondary residence. This tax aims to encourage the rental market entry of these properties to increase housing supply.

Important Details About the IHB

A crucial aspect of the IHB is its calculation basis. The tax base is determined by the m2 of usable surface area. The applicable tax rates are:

  • 5.05 euros per m2 up to 12/31/2022.
  • 10.00 euros per m2 up to 12/31/20
  • 50.00 euros per m2 from 01/01/2024 onward.

This means that an unoccupied property not only fails to generate income but also creates a tax burden that can significantly accumulate year after year.

Who Must Comply?

The tax applies to any individual or legal entity owning unoccupied properties that are not under the exclusion criteria. It is important to note that the term “unoccupied” here applies to properties that might be leased out and are not occupied for more than three months a year, excluding certain cases like changes of residence for work or health reasons.

Vacant Property Registry (RHB)

To comply with this tax, owners must register their properties in the vacant property registry. This registration must be done within two months after the property is considered vacant according to the regulations, and then the administration assigns a property identification number (NIH).

When and How is the IHB Settled?

The tax authority settles the IHB on March 31st regarding the vacant properties listed in the RHB as of December 31st of the previous year, which is notified by presenting the receipt in the bank domiciliation.

How Can WIT Andorra Help You?

At WIT Andorra, we offer specialized advice to navigate the complexities of the IHB. Our services include:

  • Tax consulting: We help determine if your property is subject to the tax and offer strategies to mitigate or avoid the tax burden.
  • Property management: We can take care of managing your property, from finding tenants to daily administration, to ensure that your property generates income and does not fall into the “vacant property” category.
  • Investment optimization: We assess your property portfolio to propose restructuring or improvements that increase its value and attractiveness in the rental market.

The implementation of the IHB in Andorra is a reminder of the importance of active real estate management. Although this tax presents challenges, it also offers opportunities to optimize your real estate assets. At WIT Andorra, we are prepared to help you turn these challenges into tangible benefits.

If you would like more information on how we can assist you with your specific situation, do not hesitate to contact us. At WIT Andorra, your fiscal and financial success is our priority.

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