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CBBA ESTATE AGENTS

COMMERCIAL/ RESIDENTIAL AGENTS/BROKERS

 OVER 30 YEARS EXPERIENCE OF BUSINESS IN SPAIN

 

 BUYING A LEASEHOLD BAR OR BUSINESS IN SPAIN

Buying a business is a very serious matter and not to be taken lightly, l have been in Spain since 1976 and a commercial agent 12 years and watched many businesses come and go. The businesses that succeed, and there are many, are successful owing to the fact that the proprietors have worked hard for long hours, did their homework and got the location right.

  A few years ago there were only a few agents selling businesses, now every Ex Pat and ex bar owner with a bit of spare time thinks they can sell businesses in Spain, unfortunately most do not even speak Spanish, and this is essential when dealing with the local authorities regarding licensing and legal requirements. The number ONE rule for anyone contemplating buying a business in Spain is only use an established agent who is familiar with all the Spanish regulations.

  Now the good news:

Today buying a business is handled more professionally and handing over an envelope with 50.000/100.000 pounds in to the seller with no receipt are well over.

Businesses should be sold at a valuation of 3 years profit and fixture and fittings, also taken into account is the length of the lease and the cost of the rent. If a business is in debt or closed then the value is only the fixture and fittings.

Café bars can be a good source of income but you need to be professional, make your own pies, burgers etc. thoroughly investigate the area in which you are buying and look at the competition. A little imagination helps, do something different; the day of the tea like mother makes has gone., as has putting outside a bar cheap looking chalk boards with prices and special offers scribbled on.

Unfortunately the last two years of recession has caused many businesses to close, this gives entrepreneurs looking to relocate to Spain and open a business a great opportunity to purchase at the right price, leaving more funds to invest and time to create a successful business.

  1. Location, location is always a must for some types of businesses, but sometimes inland businesses can work very well, they normally have a captive audience as thousands of ex pats live inland.

  2. Before signing a contract insist on an independent person to read the contract to you in English and be fully informed.

  3. Have all debts checked by a Spanish lawyer or legal Spanish person. You would be amazed how many agents sell businesses with debts.

  4. Look at the electric (is it up to standard) and make sure the business meets legal requirements as required by law.

  5. All landlords will ask for a deposit to be held until the end of the contract, this can vary from 2 months to 1 year

  6. Always ask exactly what you are paying for and ask for an inventory.

  7. Ensure you have living expenses for at least 6 months to 1 year; no business makes money from day one.  

ADVICE ON BUSINESS RENTALS AND EMPTY UNITS

When renting an office or business premises in Spain, it is important to shop around and visit many agents in order to find the premises that best suit your business needs. When looking around you will very often find that the same premises will be listed with several agents. This is quite typical in Spain. The rental agents will all charge different commission rates, so it is important that you shop around and negotiate the price, as well as the conditions.

 

Once you have found suitable premises at the right price, you will be offered a contract to sign. Make sure you read the contract fully and get advice on any points where you are not clear. Normally a rental contract will be for five years with a minimum period of one year. Some contracts may ask for a long minimum period but you do not have to agree to this as legally you only have to agree to one year minimum. There will be many clauses in the contract about who pays for what, such as repairs, cleaning/maintenance of communal areas/lifts, and installation of utilities such as water, electricity and gas. Make sure the utilities are connected and working. If the premises are old or have been empty for a while and you are to be held responsible for connecting these, then you could be letting yourself in for a large bill! If you are taking over the premises from an existing tenant, try to ensure that the utilities are not disconnected otherwise you can be waiting many weeks for re-connection. It is common in Spain with utilities to change the account holder name and bank account number the day you take over the premises. You will want the utility bills in your  name in order to claim the business expense.

Usually the landlord will ask for an aval (bank guarantee). The amount of the aval can vary from two months' rent to one year's rent. Some owners will increase the amount of aval when dealing with foreigners. The aval will need to be made by your Spanish bank in favour of the landlord. You will need to deposit the value of the aval into your bank account -- this amount will be set in reserve. Many Landlords ask for the deposits in cash this is not correct and money should be placed into an account where neither party has access unless a dispute arises for non payment of bills. This does mean you will have money in an account not earning interest and personally I find it best to come to some other arrangement if possible i.e. paying the rent up front every year on a renewable one year contract.

Once you have negotiated the contract, you can then sign it, at which point the landlord will ask for the aval documents, the first month's rent, and often a deposit of two months' rent. The regular monthly rental should be paid by direct debit from your Spanish bank account to the landlord's account, normally the first week of every month or as stated in the contract.

Normally the contract will be in the your name or company name, so you need to make sure that you receive invoices for the rental, showing the company name and CIF or your N.I.E number. The invoice will show the VAT which is recoverable through the normal VAT reporting system. The invoice will also show withholding tax (Retention) This is a system used in Spain by the government so that the landlord “pre-pays” some of their tax on the rental income.

There are many landlords, particularly private owners, that do not want to give invoices as they want to treat the income as undeclared. Do not accept this, as it is illegal in Spain -- insist on official VAT invoices! New laws have been introduced this year whereby the utility companies are now to report to the government the changes of names on utility bills in order to try to catch these people.

The best of advice of all is take your time and dont be rushed into anything and do not pay deposits until everything is clear and you know the exact costings and any reforms that may be needed to bring a business up to standards as required by law.

Do it right and you will not regret it.

 

 

Linda  on 00 34 96 6895110  or  00 34 670 33 4884

e-mail  linda@cbbaestateagents.com