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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.
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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.
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Before
signing a contract insist on an independent person to read
the contract to you in English and be fully informed.
-
Have
all debts checked by a Spanish lawyer or legal Spanish
person. You would be amazed how many agents sell businesses
with debts.
-
Look
at the electric (is it up to standard) and make sure the
business meets legal requirements as required by law.
-
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
-
Always
ask exactly what you are paying for and ask for an
inventory.
-
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