Since the Covid crisis, Andorra has seen the arrival of teleworkers in large numbers, but also new web fortunes, YouTubers and other social media stars. This influx of money was, initially, viewed favorably by the authorities, but the price to pay is too high for the locals.
After welcoming them with open arms, Andorra, this micro-state of 85,000 inhabitants, stuck in the Pyrenees, between Catalonia and Ariège, is now seeking to get rid of its influencers. The principality has taken measures to tax speculators or evict false inhabitants, in order to contain a surge in real estate prices that has become too problematic for locals.
Low taxes in a dream setting
Tired of the beaches of Dubai, seduced by the ski resorts of Andorra, its living environment, its very high speed connection, but above all its advantageous taxation, the small fortunes that have flourished on social networks have come en masse to the small state . The tax on income and corporate profits does not exceed 10%, VAT is 4.5%, and banking secrecy has been made a cardinal virtue.
The principality was used to seeing celebrities and athletes invest in its chalets. The arrival of influencers was a new opportunity to diversify its economy, very dependent on tourism, but above all they gave a huge boost to speculation.
Lots of construction but at inaccessible prices
Andorra has never built so much or sold so much, but paradoxically, for the locals, housing has become a nightmare. According to the newspaper El Diario, purchase prices increased by 18% in one year and 30% over three years. Salaries obviously do not follow.
In 2019, to protect tenants, the government froze rents in old properties, but the perverse effect caused the market to shrink dramatically and some residents are considering leaving. Andorra is in fact undergoing the same changes as other tourist cities in Europe.
The authorities want to slow down this development. From now on, non-residents no longer have the right to invest in real estate. The measure is radical but provisional, the time to pass a new tax on real estate purchases, which will finance the construction of affordable housing. However, it is not certain that this tax will be enough to dissuade investors.
An exam in Catalan
The other measure, perhaps more restrictive, which will perhaps succeed in pushing some people to pack their bags, is the obligation to learn Catalan.
Under the guise of encouraging them to “adopt the local culture” and the official language of Andorra, Catalan, thirty hours of free lessons will be imposed on new arrivals. Then the General Council plans to require that all candidates for stay pass a examination. This made YouTubers react much more than the new tax. The results are expected in a few months.