What is a Traspaso ?

traspaso what is it

In short, a traspaso is where business premises – for example a bar for sale in Tenerife – is offered on a leasehold basis. This is by far the most common way of securing a business in Spain.

Typically a buyer of a bar or restaurant for sale makes a one-off payment to buy the lease. This will normally include fixtures and fittings and often, in the case of an existing business, the existing stock and goodwill too.

After obtaining the lease, the new owner of the business will then pay the landlord (the freehold owner of the premises) an agreed rent, usually on a monthly basis but sometimes quarterly or even annually.

The Law has changed recently

Until recently this type of leasehold agreement was known as a traspaso (which literally translates as ‘a transfer’, as the lease is transferred from one party to another) but it is now called a cesión (which translates as ‘assignment’).

A cesión is really an uncomplicated version of a traspaso, created in order to allow more room for negotiation, as well as less bureaucracy in the actual transfer of a business in spanish territory.

Most business people in Tenerife, including the majority of landlords and even real estate agents, are not aware that the law has changed recently.

a traspaso is actually no longer a legally valid method to transfer ownership of a business.

The reality is that traspaso is now just a commonly used term for the transfer of a lease and will probably be the ‘slang’ used for many years to come.

Naturally, should you be considering a traspaso or cesión you should, in all instances, seek legal advice on the terms and conditions, as well as exactly what is offered in terms of physical assets, under what circumstances the rent could increase and so on.

The term of a lease for (say) a bar or restaurant for sale in Tenerife is normally for five, ten or even twenty years, but can be as little as just two years.

Getting Legal Advice

In any case it is advisable to ensure that your legal advisor negotiates as long a term as possible for the lease.

This is because your landlord can only raise your rent only in line with the official Spanish inflation rate during the lease term, as opposed to being able to raise the rent by as much as they wish once the lease term has expired.

Most importantly, your legal advisor should check that you are not being offered a rental agreement that is being presented as a lease transfer, as this would mean that you will be unable to sell on the business when the rental period ends.

When it comes to the time to sell the business on, the cesión must first be offered to the landlord. If they refuse your offer, you are then free to sell on your business to another party.

Other than ‘What is a Traspaso ?’, The two most common questions we get in relation to buying a business in Tenerife are:

What is a Gestor ?

A gestor (or gestoría) is a privately appointed agent who has experience in dealing with the peculiarities of Spanish administrative bureaucracy.

In the majority of business sales in Tenerife, a gestor is the person that guides buyers through the whole process of business transfer, including the preparation and submission of all of the necessary paperwork and the transfer of funds.

A gestor is not necessarily a qualified lawyer / solicitor (called an Abogado in Spain).

What legal fees and costs are involved in the purchase of a traspaso or cesión ?

These can vary quite dramatically, but in total typically add up to around 800 to 1500 euros for purchases made by self employed individuals.

For a purchase made by (and the creation of) a limited company (called an S.L. In Spain) the fees are typcially between around 2000 and 3500 Euros.

Will I need to create a limited company 😕

In the majority of cases bars for sale in Tenerife are purchased by self employed individuals as there are few (if any) employees other than the new owners.

Where there are multiple employees for the new business, it may be advisable to create a limited company for tax purposes.

Your legal advisor will be able to offer guidance on whether or not you should create an S.L.

Can You Recommend An English Speaking Lawyer ?

Yes of course. Our own recommended Lawyer and Gestor team charge a fixed fee of 1100 Euros for self employed transfers and 2400 Euros for Limited Company creation and the traspaso transfer.

These fees are all-inclusive of everything needed, not just the transfer of the business.

For example their services also include registration as residents (Residencia or T.I.E.), obtaining national insurance numbers (N.I.E), registering employee details with the tax authorities, obtaining free health care entitlement, even changing driving licences into Spanish versions. In other words, a one-stop service.

Naturally if you have any other questions concerning traspaso, please don’t hesitate to contact us.

Bryan

Partner at www.tbfs.es

June 2021