Information:

Information: Please Note

We endeavour to get you, the purchaser, the best value for money. We ensure businesses are not overpriced before accepting them onto our books. Any price reductions will be publicised as soon as we have the information from the vendor. If for any reason we are unaware of a price reduction, e.g. another agent is selling the same business at a lower price, we guarantee to match that price (assuming it has been verified as accurate with the vendor). Our service to you, the prospective purchaser is completely free. Our commission is paid by the vendor.

Business:

Leasehold:

Known as traspaso or cesion, is the most common method of purchasing a business in Spain. The purchaser of a leasehold has the right to resell it whenever he/she wishes. They must first, however, offer it to the freehold owner. If the freehold owner doesn't wish to buy it back, the leaseholder can then sell it to whoever they choose. The freeholder normally has the right to around 10%* of the sale (*This would be stated in the contract).

Leaseholds usually run for between 5 and 10 years, with the leaseholder having the right to renew it at the end. To purchase a leasehold, a capital sum would be paid and thereafter a monthly or annual rent [if monthly, it is usual for the freeholder to request 1 month's rent in advance and 2 month's deposit].

If you decide to sell your leasehold business, normally the lease would go back to its original term (e.g. 10 years). Rental increases, during the term of your lease, are invariably only permitted annually and based on the rate of inflation (usually 2-4%), however, when the lease term expires or is sold on, the freeholder has the right to increase the rent over the rate of inflation.

Freehold: Are much less commonly available and considerably more expensive. They have the obvious advantage of being a one-off cost with no worries of meeting monthly rents. If you find a freehold you are interested in buying remember to add an additional 10% to meet transfer taxes and other legal fees.

Rental: Contracts are typically for a year and normally renewable. The option to buy the freehold is often built in. Many landlords will request the rent is paid in advance (often 1 year), a refundable deposit will also be requested.

Financing your business

Leasehold businesses hold no substantial security for lenders if they are put into the position of having to repossess. As such, it is virtually impossible to secure a loan on a typical leasehold. The majority of leasehold purchasers either have the disposable income to pay cash or they secure a loan on an asset in the U.K. e.g. releasing equity on a U.K. property via a remortgage.

Freehold businesses can often be financed by Spanish banks by up to 75% of the bank's valuation.

Please Note:

It is our commitment to carry out all money and contractual transactions in a way that safeguards you, your money and your new business. For this reason we only carry out contract signing, deposit and balance transfer in the presence of a qualified person i.e. a lawyer (abogado) of your choice.

Mallorca`s First Choice

A few words of caution

Although the prospect of living in Mallorca may appear idyllic compared to the image of cold and dreary Britain, it is essential you take off any rose-tinted glasses if you are to live and work here successfully.

Our advice is:

1. Do not use all of the money available to you on the purchase of your business. It is essential that you keep money in reserve for foreseen and unforeseen circumstances, such as illness rendering you unable to work, renovations/repairs of equipment/premises, low or no trading periods e.g. winter months.

2. Be ready to work long hours, with normally one day a week off, particularly during the busy summer months.

3. Choose a business that is well located in a popular, well maintained area.

4. Always take professional legal advice before parting with money for a business purchase. It is vital that business debts are cleared by the previous owner or they may be passed onto you.

Miscellaneous costs

Apart from your legal fees (£800 - £900), which covers all necessary paperwork to run your business e.g., licence application, resident's permit, you will have other costs to contend with. Miscellaneous costs include for example; insuring your business, approx £250 per annum, customising publicity and replenishing stock [*obviously dependent on the size of your business, however, a full average bar stock would seldom cost more than £400. You will usually also be entitled to the stock remaining as part of the purchase price of the business].

Apartments are not usually available as part of the cost of the business. As such, renting accommodation requires 2 month's deposit and the first month's rent in advance. A comfortable 2-bedroom apartment would usually cost around £400 - £450 per month.

Taxation and Bank Accounts

We will arrange for you to open a Spanish bank account. You will need your passport and your U.K address. Normally you will receive your chequebook within one working week. Transferring money from your English bank account seldom takes longer than 3 days.

Taxation for self-employed people is straightforward. Registration in the tax system is normally included in your legal fees for the purchase of your business. Options to pay will be explained via your lawyer. If you do not feel comfortable with managing your finances, an Asesor Fiscal or a Gestor, the Spanish equivalent of accountants, are plentiful and reasonable to assist with tax returns etc. The lawyer will also arrange for you to contribute to the social security system which has options to cover your whole family if they wish to use the National Health System.

Health Services / Dentistry

You may use the National Health Service provided you bring your form E111, available from U.K. main post offices. Alternatively, you can access a large number of private hospitals and doctors if you purchase private medical insurance. Once you become a Spanish resident you will be able to register with the Spanish national health system in the same way as in the U.K. The health service in Mallorca is regarded as one of the best in Europe.

Dentistry, apart from emergency pain relief work, is private and comparable with private treatment costs in the U.K.

Schools

The state school system is free for the children of business owners paying into the *social security system (*compulsory once you purchase a business), many schools have a number of British children enrolled, who appear to adapt extremely quickly to the language. The only costs incurred with state schools are the cost of books, pencils etc.

Older children may wish to enrol in the private system to ensure continuation of their British studies. At present, there are 5 English speaking schools, 4 of which are following the same curriculum as the U.K. All of these schools have consistently achieved grades well above the U.K average.

Language

Mallorca is a multi-cultural island, the main languages being Catalan, Castilian, English and German. We recommend that you take up the opportunities, provided free by your local town hall, to learn Catalan/Castilian. Learning the language will obviously assist you to integrate with the natives but will also help you to independently deal with official correspondence, most of which is written in Catalan/Castilian.

Pets

There is no difficulty bringing your dog or cat or any other domestic pet to Mallorca.

Cats and dogs do require an export certificate and a vet's confirmation that the animal is free from diseases such as rabies. Ensure that you see your vet at least 6 weeks before departure, as paper work sent from the ministry of agriculture can often be slow.

If you are not in possession of the necessary paperwork your pet may have to go into quarantine (20 days in Spain).

Furniture Removal

Costs can vary enormously. Make sure that you get several quotes before engaging a removal firm. Mallorca's First Choice can advise you of companies, based on the island, with a sound reputation for an efficient service and a competitive price.

Cars and driving

You can bring your British vehicle to Mallorca, although you will find a right hand drive car presents you with more blind spots driving on the left. When you take up your Spanish residency you are legally obliged to have your car issued with Spanish plates and to and to submit it for an I.T.V report (Spanish equivalent of the M.O.T), this costs in the region of £500. Petrol/diesel is considerably cheaper than in the UK, e.g. a full tank of petrol for a Ford Mondeo costs less than £27.

Driving licence (E.U citizens)

You may use your British licence for up to 6 months in any 1 year in Mallorca. After 6 months or if you become a Spanish resident before this time, you must either exchange your licence for a Spanish licence (your old licence will be returned to the DVLA. If you return to Britain permanently, to get your licence back, the same procedure applies only vice-versa.)

Alternatively, you can have your British licence (provided it is the newer type with your photograph) stamped and computer registered with the traffic authorities as a non-resident. If you purchase a vehicle with Spanish plates, you must carry an international driving licence as well as your ordinary licence or alternatively get an official translation of your licence from the Spanish consulate in Britain.

Social life

Mallorca has a large English community with established organisations to help you to integrate easily. Clubs include: