WORKING ON YOUR OWN

An EU national

EU nationals can now work in Spain without any restriction. They can work under the same conditions as Spaniards, the only thing they are required to do is to obtain their residence card (see Chapter 11).

A non-EU foreigner

Non-EU autonomous workers must have the required residence permit and work permit. Non-EU residents in Spain with a work permit and an employment contract cannot re-establish themselves to work on their own account until they obtain a corresponding work permit.

BUYING AN EXISTING BUSINESS

It is easier to buy an existing business than it is to start a new one. Taking over an established business is less of a risk than starting something new. Buying an existing business that is profitable is not easy. Most people do not sell a thriving business without good reason. Traditional Spanish businesses are usually passed down within the family.

• What is the reason for selling? Is there a hidden motive?
• Check at the local planning office for any development that may affect the business.
• Have two independent valuations been obtained?
• Make sure sales turnover and profit claims can be substantiated, while accepting the declared turnover for tax purposes is usually lower than actual turnover.
• Remember when buying a business property in Spain, all debts against the property are automatically transferred to the new owner.
• It is important to obtain all necessary licences and approvals before signing any lease or purchase contract, or alternatively that such leases and contracts are signed subject to the licences and approvals being obtained.
• Never sign anything that is not fully understood.

LEASEHOLD OR FREEHOLD?

Business premises are most commonly purchased as leasehold because it is easy to terminate the lease if required. Buying freehold (purchasing a property) may be worthwhile for a secure business venture. Some contracts offer leasehold with a view to purchase which allows the buyer to agree a price with the vendor at the start of a lease.

A Spanish lease is known as a cesion. The landlord owns the shell of the building for which they receive a fee and a monthly rent, but the tenant owns everything else. The lease can be anything from five to 25 years or for an indefinite period. However, five to 10 years is a normal lease period.

Lease agreements have no set formula. The exact lease terms are stated in the contract. During the agreed period of lease, rent can only be increased by the annual cost of living index. The leaseholder is responsible for services such as electricity, water, personal taxes and social security payments. IBI (a local tax) must be paid by the landlord.

In the UK, a leaseholder is responsible for the full term of the lease regardless of what happens. In Spain only two months’ notice is required to terminate a lease. A landlord cannot terminate a lease for any reason other than non-payment of rent.

The cost of leasehold comprises a one off, up front fee, for which a 10%deposit will be required and the balance is usually payable in 30–60 days. The rules are similar to buying a property – should the potential leaseholder default the deposit is lost. Upon completion the landlord must be paid a security deposit of two months’ rent with further rent instalments paid monthly in advance. A normal business transfer will cost 1.250ε for legal fees which includes preparation of a new lease contract, licence transfers and census registrations.