Business in Spain - TilersForums.co.uk | Tile Forums

**Dan** · 31-12-2007

To set up your own company in Spain can be a long and complicated task especially if you don't fully dominate the Spanish language or know the Spanish way of life. This site is dedicated to help foreigners interested in starting up their own or buying a business in Spain. Here you can find general information about doing business in Spain (see below) or more specific information about how to set up a limited company or how to buy an existing business. If you are looking for professional help from consultants specialized in all elements of setting up a business in Spain (legal, financial, the Spanish authorities etc) see Business in Spain for further information.
Doing Business in Spain

Spain is a country, which in the last decades after entering the EU in 1984 has improved its economy and infrastructure significantly. The country still has a GNP (Gross National Product) below European average but many sectors in Spain are in expansion and the number of foreigners who starts up a business in Spain is increasing.
The strongest industries in Spain have traditionally been the service sector and the tourist industry. Within these sectors you can find international companies like Telefonica, the banks BBVA and BSCH and Repsol-YPF that have dominant positions in Europe and South America.
The service sector in Spain is located in big towns like Madrid and Barcelona where you also find a large number of international companies. You find the tourist industry throughout coastal Spain - principally in the Canary and Balearic islands and in Costa del Sol in Andalucia.
The many foreigners who have settled down in Spain have brought a complete industry of services like schools, shops, doctors, estate agents targeted to and serviced by foreigners. Apart from the service targeted to foreigners living in Spain it is popular among foreigners to open a business in the tourist industry like a bar, restaurant or hotel.
As mentioned above setting up a company in Spain is not a straightforward process like in many other countries. There are many bureaucratic obstacles and a lot of paper work, which has to be solved before you can start doing business. We hope this guide and the services provided by Accom will help you make the process of starting a business in Spain easier.
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Starting a business in Spain

If you wish to start a business in Spain there are many things you need to take into consideration. Apart from the internal factors there are many external factors (including the Spanish authorities and legal issues) that will have influence on whether your company is going to succeed or not.
Spain is known as a very bureaucratic country and to start a business is not different.
Below you can find information about the different legal forms in Spain, a detailed guide about how to set up a limited company, information about legal aspects and about finding the right location to set up the business. All these issues have to be treated in the initial phase as each won can have a critical effect on the prosperity of the whole project. If you have any questions or need further help and advice see this website Help & Advice with Starting a Business in Spain.
In Spain there are several different legal forms you can use to start-up a business. The legal form depends on the size of the company, the owners and a number of other factors. The most common form is the Sociedad Limitada (S.L.), which is similar to a limited company in other countries. The advantages of a S.L. are the minimal capital needed to start up the company (3003) and the limited liability to the owners. In nearly all cases it can be recommended for foreigners who wish to set up their first business in Spain to choose the form of an S.L.
For a detailed guide about how to set up a limited company (Sociedad Limitada) in Spain click here.
The legal aspects are very important to understand before you start planning a new business. Depending on the type of business you are planning to start the legal aspects will be more or less complicated but we always recommend seeking some kind of legal advice at this stage. Otherwise you might spend a lot of time and resources and finally find out that your idea is not possible to accomplish because of legal barriers.
In Spain nearly all type of companies who treats directly with the public or have employees will need a special permission and/or the requirements to operate can be very strict. To mention a few examples where you will need special permissions (which are popular business amongst foreigners) are bars, restaurants, jet-ski rental, food shops, tourist activities, etc.
Finding the right location and property is also very important in the initial phase of starting a business.
When selecting the location for your future business factors such as knowledge of the area from previous vacations or distance to your accommodation are important but not the only things to be aware of. Things such as the number of competitors in the area, the number of customers during the winter (and not only in the tourist season) or the taxes and requirements in the province are also very important to analyse and to take into consideration.
When you have found the right location you need to start looking for the property wherefrom your business will operate (office, establishment, restaurant, etc). At this stage you have to take the decision to buy or to rent the place. Both options have advantages and disadvantages economically and fiscally depending on the type of business and a number of other factors.
Although you have decided upon a type of property for your business and the location we can still recommend to start looking at different possibilities to get a better understanding of the market in Spain (including prices, difference in quality, variation in price in different locations, etc.). If you need help we can provide you with a list and information about different business and properties for sale or for rental.
Before deciding upon location and the property we recommend to take into consideration whether it is an advantage (economically and timesaving) to buy an already existing business instead of starting from cero (see the next section Buy an Existing Business for more information).

**Dan** · 31-12-2007

Buying and existing Business in Spain

If you are thinking about opening a bar, a restaurant, a shop or any other business where you don't necessarily need to start the company from cero it might be a good idea to buy an existing business.
The advantage of buying an existing business in Spain is that many licenses, work contracts, permits etc. are given directly to the company and doesn't expire just because you change the ownership of the business. This can save the new owner a lot of time and resources not having to wait for the necessary licenses and contracts for employees.
Even though you don't find exactly what your are looking for it is normally still cheaper and much faster to renovate an old establishment (although you will need some construction permits depending on what you want to change) than to construct a new one and obtain all the necessary licenses.
If you have decided that buying an existing business is the best solution to enter the Spanish market you can find a few recommendations and things you should be aware of below.

Freehold Vs. Leasehold

When buying an existing business in Spain you have two options - to buy a Leasehold (Traspaso) or a Freehold business.

The main difference between the two options is the initial investment required and the legal ownership of the business.
When you buy a leasehold the initial cost will be much lower than buying a freehold but you will have to pay a monthly rent as long as the lease last. This rent will be fixed over the lease period and only upgraded with the official inflation each year.
As to the legal ownership the buyer of a freehold will own the establishment whereas the buyer of a leasehold will be responsible for the maintenance and running the business but when the leasehold finish he will not be the owner of the business (although some leasehold contracts gives an option to buy the establishment or lease it for another period at the end of the leasehold).

Leasehold

In general it can be recommended to start with leasing a business if you are planning to set up your first company in Spain - like a restaurant or a bar. The main advantages with a leasehold (apart from the lower initial investment) is that it is a fast and easy way to get started (it only takes a few days to arranges a leasehold contract) and that it is also easy to get out again as the buyer always has the right to sell the leasehold to a third party.

As you can always sell the leasehold it is a good and safe way to learn about the business and to decide upon buying a freehold or getting out of the market. If you decide to sell the leasehold the owner is entitled to a percentage of the sales price (normally between 10-25%) but you can sell the leasehold at whatever price you choose.
There exists different forms of leasehold contracts but most businesses are leased from 5 to 25 years on a renewable lease. When you sign the leasehold contract you will normally have to pay 2 months rent in deposit plus the first months rent. Thereafter the rent will be due to be paid monthly upfront.
As you are not the owner of the business you should be careful about making major changes to the business premises without getting a written permission from the owner.

Freehold

If you decide upon buying a freehold the process will be similar to purchasing a property (you will have to sign a new title deed with the public notary, pay VAT on the purchase, register the purchase of the property, etc).

The arrangement of buying a freehold is both more expensive and takes a longer time to finish than a leasehold contract. The major advantage is that you will be the owner of the business and the property. This means you don't have to pay a monthly rent (only the mortgage if needed) and you can even sell the establishment as a leasehold if you get tired of the business.
If you have decided that buying or leasing an existing business is the best solution to enter the Spanish market you can find a few recommendations and things you should be aware of below.

Recommendations

First of all we can recommend to take your time and to look at several businesses before deciding upon one. The prices can vary a lot from place to place and by looking at different options you will be able to compare prices, locations and quality between different establishments.
Before deciding upon one business you also have to take into consideration the number of competitors in the area, the number of possible customers (and not only in the tourist season) and the taxes paid in the province.

If you have found a business you like you should arrange for a second visit. At a second visit it is recommended to bring professionals who can go through all the important installations (water, gas, electricity, etc).
At this stage it is also a good idea to contact the former owner and to spend some time in the area. This how you can learn why they want to sell and get a better understanding of the business. You might even be able to use the former owners experience and contacts to establish your own group of clients.
Before you sign any contract there are still a number of important things to clear out.
Although many licenses, contracts etc. are transferred to the new owner you still need to make sure that all the paperwork are up to date and in order. When you buy an existing business you don't only inherit the permissions but also all outstanding debts and unpaid bills etc. It is therefore very important to make sure that all the papers (licenses, employees contracts etc.) are in order and that the business has paid all taxes, wages and outstanding debts. Otherwise you as the new owner will be reliable economically and legally.
When you are sure that all the papers are in order you have to sign a purchase contract and the new title deed (if buying a freehold) that will transfer the company into your name. The tittle deed is only valid if signed by a public notary and is the only official way whereby you become the legal owner of the company.