Andorra’s Free Zones: Key Industrial Real Estate

Published on October 3, 2025 and written by Cyril Jarnias

Nestled in the heart of the Pyrenees, Andorra is increasingly establishing itself as a strategic destination for industrial real estate investments. Thanks to its attractive free trade zones, this small country offers unique opportunities to benefit from a favorable tax framework and specific incentives for businesses seeking to establish or expand their operations.

In this article, we explore the key sectors that make Andorra an essential destination for savvy investors, while highlighting the unique advantages offered by these strategic economic zones that should not be missed.

Understanding the Appeal of Andorra’s Free Trade Zones for Institutional Investors

Tax Benefits of Andorra’s Free Trade Zones

• Corporate tax capped at 10%, with potential reduction to 2% for certain holdings or newly created companies under specific conditions.
• VAT (IGI) at 4.5%, the lowest rate in Europe, significantly reducing costs on goods and services.
• No wealth tax, inheritance tax, or tax on dividends distributed by Andorran companies, for both residents and non-residents.
• Tax exemption on certain investment income (bonds, dividends, capital gains on assets held for over ten years).
• Reduced social security contributions enabling competitive labor costs.

These tax benefits are particularly attractive to institutional investors, who benefit from legal and stable tax optimization, supported by the absence of double taxation with many European countries.

Modern Infrastructure and Logistics Services

• Recent industrial parks, automated warehouses, and multimodal platforms facilitate the storage, processing, and shipment of goods.
• Efficient transport networks to France and Spain: quick access to Mediterranean ports and European roadways.
• Simplified and digitized customs services, allowing for accelerated processing of trade flows.

Strategic Geographic Location

Andorra is located between France and Spain, in close proximity to major European Union markets.

Businesses benefit from direct access to over 500 million European consumers, without the constraints of heavy taxation or excessive regulation.

Asset	Impact
Ultra-competitive taxation	Increased profit margins
Border location	Rapid access to EU markets
Modern infrastructure	Reduced logistics delays
Political and legal stability	Investment security

Examples of Successful Companies and Sectors

• International trade: Import-export platforms and distribution companies benefit from low costs and customs facilities.
• Logistics and e-commerce: Storage warehouses and order processing centers for Southern Europe.
• Technology and fintech: Startups and tech holdings establish themselves to benefit from the taxation and administrative simplicity.

Favorable Government Policies

• Implementation of tax treaties to avoid double taxation with over 15 European countries.
• Simplified administrative procedures for business creation.
• Investment incentive programs and support for innovation in high value-added sectors.

Industrial Real Estate Market Trends in Free Trade Zones

• Strong demand for modern warehouses and logistics platforms, driven by e-commerce growth and proximity to Spanish and French markets.
• Rising industrial real estate prices, but attractive rental yields due to limited supply and stable rents.
• High capital gains potential for institutional investors, due to the combination of low taxation, access to European markets, and efficient infrastructure.

Thus, Andorra’s free trade zones offer an optimal tax and logistics environment, a strategic location, and particularly attractive return prospects for institutional investors.

Logistics Warehouses in Andorra: An Untapped Potential

Andorra benefits from a strategic geographic location between France and Spain, making it a prime location for the development of logistics warehouses. Its advantageous taxation, modernizing infrastructure, and government initiatives promote the establishment of innovative logistics platforms, particularly in the e-commerce and dark store sectors.

Strategic Factors for Logistics Establishment in Andorra:

• Central geographic situation: Immediate proximity to France (via Ariège) and quick access to Spanish Catalonia.
• Attractive taxation: Among the lowest corporate tax rates in Europe; suspension regime allowing temporary storage without customs duties for re-export.
• Government initiatives:
  • Development of free trade zones dedicated to logistics.
  • Infrastructure projects like the national heliport or airport capacity expansion.

Factor	Advantage for Logistics
Taxation	Reduction of operational costs
Connectivity	Accelerated access to EU markets
Compact size	Express urban distribution

Current Infrastructure & Sector Needs:

• Regional platforms located near major routes (e.g., Mazères/A66 Toulouse-Andorra-Barcelona) adapted for multi-temperature storage (chilled/frozen/dry).
• Rapid growth of e-commerce requiring urban warehouses adapted to fast flows (“dark stores”).
• Identified need: capacity expansion to absorb the growing volume linked to the digitalization of commerce and to strengthen cross-border connections.

Potential Advantages Linked to Andorran Free Trade Zones:

• Specific tax incentives facilitating import/export without immediate taxation.
• Simplified customs regime allowing optimal management of stocks destined for the European market or for re-export outside the EU.

Examples of Companies That Could Benefit from This Location:

• International food distributors (fresh/frozen products via tri-temperature platforms).
• E-commerce operators specializing in last-mile delivery.
• Pharmaceutical or electronics companies requiring rapid transit between Spain/France/Central Europe.

Ideal Types of Goods Based on Available Road Connections:

• Perishable food products
• Electronic equipment
• Clothing/fashion
• Automotive spare parts

Potential Challenges Faced by This Emerging Sector:

1. Land limitations related to the mountainous topography restricting certain large-scale real estate projects.
2. Need to continuously adapt road infrastructure to increasing heavy vehicle/international transit traffic.
3. Fine management of specialized human resources in a local economy still limited in large-scale trained profiles.

Major Opportunities for Interested Investors:

⚡️ Ultra-competitive taxation on income from transit/logistics
⚡️ Dynamic market driven by sustained growth in cross-border digital commerce
⚡️ Unique positioning as an intermediate hub between two European economic powers

Players capable of integrating advanced technologies (automated logistics, connected multi-warehouse management) will fully benefit from Andorra’s potential while anticipating its specific structural constraints.

Industrial Real Estate Yield in Andorra’s Free Trade Zones

Factors influencing the yield of industrial real estate in Andorra’s free trade zones:

• Logistics accessibility: High-speed connectivity and some of the lowest electricity rates in Europe facilitate management and reduce operational costs. Negotiations for improved access with the European Union further enhance the logistical appeal.
• Rental demand: Growing interest from foreign investors (FDI representing 12% of GDP in 2023) boosts demand for industrial spaces, particularly in free trade zones where taxation attracts businesses and logistics providers.
• Advantageous tax schemes:
  • VAT at 4.5%, well below that of neighboring countries
  • Corporate tax capped at 10%
  • Absence of income, wealth, or inheritance tax
  • Favorable tax treaties under negotiation

Type of Real Estate Investment	Average Yield (%)	Current Trends
Industrial Real Estate (free trade zones)	6–8%	Strong growth linked to the logistics sector; increased tax attractiveness
Commercial Premises	5–7%	Stable demand; yields supported by tourism and cross-border trade
Apartments/Studios	3–5%	Dynamic seasonal market but yield lower than industrial
Parking Lots	4–6%	Low risk; interesting yield for modest investments

For regional comparison:

• In Spain: industrial real estate outside free trade zones hovers around 5–7%, commercial around 4–6%, residential often lower.

“The exceptional tax framework allows not only for accounting optimization but also increased competitiveness compared to Spanish or French markets. We chose Andorra for our main warehouse primarily due to the reduced energy costs and administrative speed.”

— Gérard S., industrial real estate owner, Andorra la Vella free trade zone

“Rental demand has never been as strong as it is now, especially since several large companies have set up in our industrial premises located in the free trade zone.”

— Maria T., real estate manager, Escaldes-Engordany

Numerical data indicates that the industrial sector in free trade zones currently offers the best compromise between high profitability (up to nearly 8%) and managed risks thanks to the stable political context, efficient infrastructure, and ultra-competitive tax regime.

The expected evolution remains very favorable, subject to the maintenance of ongoing international agreements with the European Union and the high level of foreign direct investment.

Industrial real estate in free trade zones = current engine of the Andorran market