BUYING A BUSINESS IN SPAIN

BUSINESS LICENSE . All business in Spain must have a license and if they do not there could be many reasons, and to be honest many businesses run for years with the license pending in the local town hall and never seem to have a problem, but they could be closed at any time so do not risk it. The main reason there is no license is:-

                                              3. Electricity not up to EU Standards.

                                              4. Never applied for one.

All this can be sorted out but can be very expensive and must be taken into account when buying a business.

FREEHOLD  Not many people purchase freehold when they first come to open a business in Spain buts it’s the best option  if you can as if you find the business is not what you really want, you can then lease  the business yourself and obtain a nice monthly income for yourself.

 LEASEHOLD  In Spain this is now called a ¨CESION¨ and there is no exact format required,  the duration and terms of the lease depend on the original contract of the tenant selling the lease. On buying a lease the rent normally goes up a little on exchange of contracts. Leaseholds now are more like a normal rental contract with permission to sell on to another party written in the contract. Always have contracts explained to you fully in English before you sign.

 HOW  IS BUSINESS VALUED . A freehold valuation is of course the value of the property plus good will,  fixtures and fittings, location , type of business and turnover.

 Leasehold is very much the same but with out the cost of the property, but you must also take into consideration  the cost of the rent, and the length of contract

 FUNDING  First decide how much you want to invest in a business, never invest all your money in a business as  you will need to pay for opening licenses also accommodation as most businesses do not have living accommodation. As in any new venture you will want to change a few things in the business and if necessary, decorate and reform your new business to suit your tastes. Banks do not normally lend money to purchase a Leasehold business but will on a Freehold of up to 70% of the bank valuation of the property.

 DEPOSITS Once you have decided on a business or property and a price has been agreed, a 10% deposit is made and held until the agreed completion date, this deposit is not returnable should you change your mind, so be sure before paying a deposit. This is of course returnable should the seller default in anyway or any legal problem occurs and the sale does not go though being no fault of the buyer.

 LANGUAGE PROBLEMS  Initially you will have no problem opening a business not speaking Spanish in a holiday resort, but to run a successful business you need to learn as you limit yourself business wise to tourists and expats, its always a good idea to have a Spanish speaking member of staff. Inland businesses can be more difficult if you do not speak  the language and you will need a Spanish speaking member of staff to help you.

BUSINESS FAILURES . Businesses  fail for a number of reasons and in my opinion the first being low on start up capital and the inability to work hard. As in any country opening a business is a risk, but if you work hard and take on a good business in a good location you will achieve good results.

ACCOMODATION.  Most people rent when they first open a business in Spain preferring to use capital to expand and promote their business. The average cost of a rental is between 600 euros and 1000 euros a month and two months deposit is normally required

 On first arriving to look for a business we will sit down and explain all aspects of buying a business in Spain and answer any questions you have regarding Tax, Residence in Spain, Schooling, Medical and doctors, pensions etc

For free information e-mail mail us and send your phone number and we will ring you back.