Buying Businesses in Spain Guide www.spainsaver.com

Before you start any business venture in Spain you will have examined the market to make sure there is a demand for the product or service you are to provide. Bear in mind that the market here is very different to that in your home country. As an EU citizen you have every right to start a business in Spain, just as though you were at home so once you have convinced yourself of the viability of your new business, you can get started.

Step one, no matter what you decide to do is to visit the national police station and apply for an N.I.E. number. This is simply an identification number for foreigners and is mainly for tax purposes. Simply take along your passport and complete a simple form. Usually your number can be collected within four weeks.
In Spain there are two levels at which a business must be registered. At local level you need to register your business with the town hall and obtain an opening licence (Licencia de Apertura) which will clearly define your business and the way in which it will trade. At national level you will register with the IVA office which is the equivalent of the Inland Revenue office. The Agencia Tributaria will collect your tax. You will need to be fluent in Spanish to undertake the form filling on your own, otherwise employ the services of a Gestoria who will do all the hard work for you for a reasonable fee. The next step would be to decide on the format of your business, similar to in the UK with PLC and Ltd companies. You will need expert advice as to which type best suits your business.

Empresa Individual is equal to a sole trader with the business being run in one persons name only.

Sociedad Civil is a partnership where several individuals will come together to form a business.

Sociedad Limitada is a limited company with registered shareholders and a set minimum trading capital in the bank.

Sociedad Anonima is a larger company with a large minimum trading capital. This S.A. company also has shareholders.

Tax contributions
Whether you are a resident in Spain or not, if you have an income here, you may be liable for tax payments, as in any other country. As a foreigner it can be a complicated and costly situation so you will without doubt need specialist advice. Your Gestoria will be able to help you.

Social Security payments
All businesses are registered with the Social Security Office and as such will be liable for social security payments which vary according to the status of the business. Making these payments will entitle you to the benefits of the local health service such as doctors and hospitals. The payments will also contribute towards an old age pension, although contributions have to be paid for a minimum of 15 years to qualify.

A company employing people will also have to pay social security on their behalf. This stresses the fact that if you employ people you must have a proper written contract with them for mutual protection.

Finally, if you are buying an existing business in Spain it is vital that you examine every aspect of the business before signing anything or parting with your money. It is crucial that you ensure the company has no debts or tax liabilities that would be transferred with the business.

If you do take the plunge and start a business in Spain, you will find that you are accepted by the Spanish as a foreigner and you will have the respect that you earn. You will however find many business practices here very different to those in your home country. You will also find it impossible and unreasonable to try to change them. There is however, plenty of money to be made.

BEWARE
When you buy a business in Spain, you buy the business debts too !
Social Security

How to get a Social Security Number:

The process of getting a social security number is now very easy.

Simply go to any social security office, with your original passport and copy of the passport. You will have to fill in a form, which is in Spanish, but its quite easy as the normal questions are asked like, name, address, names of parents etc. They issue the number there and then and give you a temporary card. They send on the plastic card at their leisure. It is not necessary to have a job, or even a NIE to get a social security number.

Why do you need a Social Security Number?:

a. You need a social security number to work in Spain. I am sure that you are aware that if you are self-employed you have to pay into the social security, but also if you are employed you pay and this should be deducted by your employer before payment.

b. You are entitled to social security benefits, but pro rata to what you have paid in.

c. You also are entitled to medical care i.e. you can sign on with your local doctor.

d. You only have to pay if you are earning money in Spain, i.e. not on any pension from the UK.

Leasehold bars in Spain – a simple guide

Buying a leasehold bar in Spain is a good way of acquiring a business without the massive outlay of a freehold. A lease in Spain is called a ‘Trespaso’.

Purchase price

The price quoted is for a new lease at the terms stated in that lease. You will normally pay this in one lump sum on signing over of the new lease. It is normal practice to secure a sale in the first instance with a 10% deposit. This deposit is non-returnable unless the sale falls through because of the seller. If you simply change your mind, you will lose your deposit.

Length of lease

This will be clearly stated in all publicity advertising the business and will be written into the lease agreement. The norm is 5,10,15 or 20 years. Sometimes an endless lease is offered.

You have an automatic right to renewal of the lease providing you pay the rent on time and keep within the terms of the lease.

During the lease

You will pay the agreed rent on a monthly basis.

You can run the business in accordance with the terms of the lease (ie as a bar).
You can alter the theme of the bar, the décor, the furniture etc but you cannot, without the landlord’s permission, alter the structure of the premises.
You will be responsible for the electricity, water, community charges etc
Your landlord is responsible for external repairs and major structural work
The rent will increase by the rate of inflation each year
On renewal of the lease the rent will be increased (usually 20%)

Selling the lease
At any point you can sell the lease, at whatever price you want. You will normally have to pay your landlord a commission on the sale of 10-20%. A new buyer will be responsible for any costs involved in the sale.

Security issues

You may be required to insure the property
You will need to give your landlord a security deposit of 2 months rent. This is returned to you when you leave, providing the premises are in good condition
You will also need to pay your rent one month in advance

Disputes

Your lease is a legal contract and is governed by Spanish law. If you have a disagreement with your landlord, either party can take legal action in the local court.

You have rights as a tenant and your landlord has rights to protect his property.

Once you have found the right business, you pay a 10% deposit to secure the purchase. This deposit is placed in a client account; We do not give it to the seller at this point in case there is a problem with the sale and we have to return it to you.
We prepare an option contract which usually lasts 30 days but can sometimes be more, if required. This means that you have 30 days in which to pay the balance.
During the term of this contract, the seller cannot increase the price, nor offer the business to anyone else.
During the term of this contract, your appointed legal advisor will check the licence of the business and check there are no outstanding debts.
On the set completion date, all monies are transferred to the seller, in front of your legal advisor. You get the keys and your new lease is signed by the landlord.

Important Notes

If the seller pulls out of the sale for any reason, or it transpires that the business is not 100% correct, your deposit can be returned to you or used against another purchase.
If you pull out of the sale because you have changed your mind or cannot raise the balance of the funds, you will forfeit your deposit.
If it transpires that there are outstanding debts on the business, these will be paid by the seller.

Frequently Asked Questions:

If I buy a lease how long will it run for ?

It will vary but it will be set out in the contract. The norm is 5-10-15 or 20 years

What happens at the end of the lease ?

You renew it with your landlord. He can increase the rent at this point

How much will the rent rise by each year ?

The rate of inflation, once a year. At renewal, the landlord will increase it by 10-20%

Can I alter the inside of the bar ?

Yes but not the structure. You can redecorate or refurnish

Can I sell the lease ?

Yes, at any point for whatever price you like. However, you will have to pay a commission to the owner and an agency fee to the estate agent (us)

How old do I have to be ?

You have to be 18 years of age

Am I going to lose all my money ?

No, providing that you have bought the right business – that is our job to advise you, and providing that you maintain a good business; buy well and you will have no trouble selling again

What about licences ?

You do not need a licence to own a business but the premises must be licenced. In the case of a bar, the bar has a licence and when you buy that bay you take over the licence, the name on the operating licence is changed to yours.

In general the process of licensing is very different to the UK and obtaining a licence is a relatively easy process as long as the business complies with all the regulations. There are also many different types of licence issued to licensed premises . IE Drinks Bar, Bar / Cafeteria, Music Bar, Bar with Live entertainment, Discotheque/ Caberet Bar. Obviously all licences would be examined by your legal representatives prior to your purchase

Licences are currently being reviewed and re classified in Spain so check them out carefully.

HOPE THIS INFO HELPS CONTACT ME WHEN YOU ARE THINKING OF TAKING THINGS FURTHER. We will help you every step of the way.

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Andy P Coates

andy@spainsaver.com

0034 670584120