The Process
There are three ways of acquiring a business in Mallorca, Freehold, Leasehold and Rental. The following is an outline of what you can expect from each one.
Freehold Commercial Property
There are many empty shell freehold properties for sale in Mallorca. They tend to be the ground floor commercial parts of new build apartment blocks. The finish is usually rough walls and no flooring so the transformation into your ideal premises will have your stamp on it from beginning to end. After acquisition you have to apply for an ‘Apertura’ (opening licence) in order to start trading. This involves appointing a qualified architect/project engineer to draw up plans and list the necessary works and regulations that have to be complied with. The local authority will grant the licence once the work has been completed and verified by the Project Engineer.
If your premises are going to be a restaurant, bar or club it must have a ‘Turismo’ licence and the owners must have a ‘Food Handlers’ certificate. The ‘Turismo’ licence is applied to the property but the ‘Food Handlers’ certificate is granted to the owners after satisfactory completion of the course.
This purchase is similar to buying a house or apartment in that the price agreed will be subject to an additional 8%-10% of the purchase price for transfer taxes, legal and notary fees.
 Freehold Business
A ‘going concern’ freehold business is a rare sight on the business finder lists. If one comes up view it urgently with an open mind. They can represent the best there is in terms of property appreciation and business venture. Spanish people rarely sell their freehold businesses as they view the income as their pension and their children’s inheritance. Other nationalities however don’t feel the same and so these opportunities sometimes arise. The price agreed for this purchase is again subject to an additional 8 – 10% of the purchase price for transfer taxes, legal and notary fees.
Leasehold Businesses - known as ‘Traspaso’
This is the usual type of business sale in Mallorca. You purchase the lease, fixtures and fittings, stock and good will of the business for a set amount. In addition you pay rent on the building. The landlord owns the shell of the building and you own everything else. The expected term of a new lease is ten years and can usually be renewed for another term without payment of a further premium. It is unusual for the term of any lease to be less than five years.
The ‘traspaso’ contract will state the rent which can thereafter only be increased by the annual ‘cost of living index’ as published annually by the Spanish government – currently around 3%. There is one very important difference between a Spanish ‘traspaso’ and a British lease. In the English system if you break the terms of your lease you can be held responsible for the full term of the lease. In Spain you need only give two months notice and then can pass the property back to the landlord.
The ‘traspaso’ can be sold on by you. The Landlord usually then agrees to a full lease term to your buyer rather than the balance of the years that remain on your lease.
The only reason that a landlord could terminate your lease is for non-payment of rent. The court system is used regularly for this purpose and eviction and repossession happens.
 True cost of buying a lease
The purchase of a lease (Trespaso) is the way most people start their business life in Mallorca. Purchasers are always surprised at the amount they have to pay in addition to the lease price. We have attempted here to give you a reality check of what it will actually cost including legal fees.
Agreed price for the lease
Plus
IVA (VAT) @ 16%
Plus
Two months security deposit on the rental
(This is retained by a lawyer and refunded when you give up the lease).
Plus
At least three months rental in advance
Plus
Lawyers costs
This is an EXAMPLE of what the total cost upfront would be if your agreed price for a lease was €30,000 plus €1000 per month rent.
This is an EXAMPLE only, there are many variations including the need to give six months rent in advance down to being given a rent free period. Everything except the IVA (VAT) is open to negotiation.
Rental Businesses
A rare sight, but ideal for people wanting to test their business ideas without giving long term commitment. The rental contract is normally renewable on a year to year basis with an option to buy built in. You will always have to pay a refundable deposit to secure a rental and it is usual for the year’s rental to be paid in advance.
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