ANDORRA Law and Practice Contributed by: Elena Redondo, Albert Hinojosa and Marc Ambrós, Cases & Lacambra
the purpose of conducting a commercial, indus - trial, professional, logistics or teaching activity, as well as other purposes. 6.3 Regulation of Rents or Lease Terms Unless a law stipulates otherwise, the princi - ple of freedom of contract between/among the parties governs in commercial leases. Without prejudice to the principle of freedom of contract and pursuant to the Andorran provisions, the maximum length for a commercial lease agree - ment is four years. Rent is freely agreed upon between the land - lord and the tenant. A rent adjustment, if agreed between the parties, cannot be carried out more than once per contractual year. Furthermore, it is the use of variation experienced by the general Consumer Price Index during the previous cal - endar year based on the income paid when the right to adjust came into being. However, a fixed minimum income can be estab - lished and increased according to turnover or operating income. In this scenario, the period during which the tenant must provide the land - lord with business accounts must be agreed. If the tenant does not provide the landlord with the business accounts, the landlord is entitled to ter - minate the contract and claim the corresponding compensation for damages suffered. Any other adjustment system agreed upon between the parties is void. 6.4 Typical Terms of a Lease The length of a lease term is agreed upon by the parties, but it cannot be less than four years. If a term is not agreed by the parties, or if a term lower than the legal minimum is agreed, the lease shall be deemed to be for a four-year term. Once the minimum term has expired, the agree - ment is tacitly extended for periods of one year
unless a party notifies the other of its willingness to resolve the agreement, with a minimum notice of three months before the end of the principal term or any of its extensions. The landlord is obliged to carry out the neces - sary repairs so that the tenant can continue car - rying out the activity for which the real estate was leased. The tenant is obliged to carry out the repairs that are the result of wear and tear due to normal or abnormal use of the real estate or its facilities or services. The rent is paid in the manner agreed by the parties in the agreement. In the absence of such agreement, the rent shall be paid monthly, within the first five days of each month. 6.5 Rent Variation The rent is freely agreed upon between the land - lord and the tenant. During the contractual term, and if the parties have agreed on no price adjust - ment system, the landlord and the tenant may adjust the rent at the end of each contractual year in accordance with the percentage varia - tion experienced by the general Consumer Price Index or the other price adjustment mentioned in 6.3 Regulation of Rents or Lease Terms . 6.6 Determination of New Rent Any increase in the rent is determined in accord - ance with the general Consumer Price Index or according to variables such as turnover or oper - ating income. See 6.3 Regulation of Rents or Lease Terms and 6.5 Rent Variation . 6.7 Payment of VAT The leasing of real estate is generally subject to VAT at a 4.5% rate. The lessor will charge VAT to the lessee, who will bear the VAT cost. However, no VAT will be payable on rent from the leasing
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