E&G Solicitors in Spain explain some of the things to be aware of when looking to buy a business in one of the most attractive business locations in Europe.
Common businesses opened by British expats in Spain often revolve around the tourist industry such as bars, cafes and B&Bs.
Non-EU citizens starting a business in Spain and living there will need a valid work permit to do so. This is applied for at the Spanish embassy in the UK (or your home country).
You will need to provide evidence that you have enough capital to invest in your business as well as supporting yourself while living in Spain.
You may be required to submit a business plan to demonstrate the strategy and proof of your skills or experience. You may also stand a better chance if you can demonstrate how you will create jobs for Spanish people..
You can apply for resident status after five years but until then you’ll need to renew your work permit every year.
Points to consider when buying a business in Spain
When buying a business in Spain, you should have access to the business accounts for the past 3-years. This will help you decide how to structure the business as well as understand the company’s tax position and various other considerations.
An impartial Spanish accountant can help you analyse the last three years’ accounts. If the business does not have three years of accounts, then there may be no value to it at all. You should be certain of the value of the business you are buying.
How you structure your business is important, whether that be a sole trader, partnership or limited company.
It’s wise to avoid personal liability altogether. Hence setting up as a limited company with public liability insurance is often a good route.
Be aware that if you reside in Spain as you take over your new business, you will be liable to tax in Spain on all of your worldwide assets
If the business you are buying is a going concern and involves purchasing a property, then you need to decide whether it will be in your own name or that of the business
Consider the market for your business: are you expecting to build on an existing reputation or will you be changing its focus. Do your research and have a strategy.
Understand why the existing owners of the business want to sell. If the reason is insufficient revenue, then you may want to think twice about your purchase. Review the accounts in advance can help you make this decision.
After Brexit
While non-EU citizens who are not residing in Spain may be required to prove they have the capital to buy a business, EU Nationals who live in the EU can set up partnerships or Trade as sole traders with no minimum investment requirements in Spain.
You just need to be aware of the responsibilities as the business owner as well as the various rules and structures of business in Spain.