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Buying a business on Mallorca?

Essential Information - an Online Fact Sheet This page forms part of our initial information pack. The main aim is to provide you with a clearer insight in to what is involved in running a business here on Mallorca. Like you, everyone working here at Mallorca Properties Online has sat looking at information sent to them by companies offering businesses for sale abroad. Its not till you get here that you realise who you can and who you cant trust. Unfortunately for some they realise far too late. So please take your time to read through this information, we hope you find it both interesting and informative. We have tried to cover as many topics as we can in order to give you a sound insight into what is involved in buying a business here in Mallorca (Majorca). Don’t leave your future to chance; feel free to speak to our competitors and then speak business with us.                                          Mallorca Properties Online                                          British owned and proud to be the most                                          Recommended Business Agent on Mallorca (Majorca)

Choose your agent carefully Buying a business in Mallorca is completely different to buying a business in the UK. On Mallorca it is normal practice when selling a business to have it placed with many different agents, as this without question gives the seller the biggest exposure. As a result, very few businesses are for sale exclusively by one agent. We are sure that you would agree that it is unimportant which agent sells your business, but as a buyer your choice of agent is critical. The would-be buyer should choose an Estate Agent who is legally registered, fully insured and efficient, whilst also being able to provide a full aftersales service. Should you see a business advertised elswhere, on the internet, or in the newspapers, that you wish to view please contact us. In the unlikely event that we haven’t got the business listed on our books, we will arrange to include it on our list in time for your visit. We would recommend that all buyers insist on visiting the offices and checking the company’s registration thereby satisfying themselves that the company is indeed in a position to fulfil its promises of aftercare. All too often we hear stories about the man or woman who operates from a brief case using only a mobile phone and a car, or a socalled Estate Agent who operates from a “smoke-filled, seedy, side-street office.” These people are then nowhere to be found when you really need them the most! Your decision to use Mallorca Properties Online is just as important as the business you buy The Mallorca Properties Online aftercare service is available to you free of charge provided that you have not seen your chosen business previously with another agent on Mallorca. We undertake to show you businesses that are available for purchase, and we have a strict company policy of no “hard sell”. We will never place you in an uncomfortable position or make you feel in any way to buy, any decision to be made will be entirely yours. In the event that you view a business with another agent, then that asent is entitled to complete the transaction, therefore denying you the completely free of charge Mallorca Properties Online SL aftercare service. Over 30% of our business is generated by referrals and personal recommendations. Click here for our enquiry form

The Buying Process There may be many reasons why you are considering a new beginning with a life and business in Mallorca. You have already begun the process by contacting Jamie & Sheldon SL and we will now try to make the buying process as clear as possible, so that you can make a reasoned and objective decision about your future. It may be that you will need to make more than one visit to the island before you find your perfect business, but during your time here we will make every effort to show you the whole island, so helping you to visualize any business that you are considering within the island setting. Please! Help us to help you. We welcome visitors to our office at any time, but in order for us to provide you with a truly efficient service we would respectfully request that would-be purchasers notify us and give us as much notice as possible of an intended visit. Why? Because our services are in demand, it is essential that we know of your journey so that we can give you our individual attention. Even those who make an immediate decision to visit, please inform us before you board the flight.

Flights to and from Mallorca Palma International Airport is a large, modern airport situated just a few kilometres from Mallorca’s capital city of Palma. All the main resorts are within one hours driving time from the airport. There are frequent flights to Britain throughout the year by either budget airlines or package holiday carriers. You may wish to: a) Book a Package Deal and incorporate a holiday with your visit. b) Book with one of the budget airlines by phone or the Internet. We are always willing to check if we can improve on the price that you have been quoted. At the airport you can be met at the arrivals gate by one of our team. You will know in advance who will be meeting you and you will be advised of his/her mobile phone number. Remember that you will need a minimum of 2 Euros credit to use a pay phone in order to be connected to a mobile phone in Mallorca. Click here for our enquiry form.

Accomodation on the island Unless you have booked a package holiday deal, we will be able to find comfortable accommodation on the island within your price range for the duration of your stay. Our representative will take you directly to your accommodation from the airport. Only when you have had a chance to settle in will we discuss your business needs and put together a workable itinerary, which will cover your specific requirements. Property Listing A brief look at our listings will show you that we represent a large selection of businesses throughout Mallorca. At Mallorca Properties Online SL we take seriously the responsibility of listing only viable businesses which present value for money to our potential customers. The asking price of the business is in pounds and is therefore dependent on the daily exchange rate against the Euro. Remember that all prices are negotiable and we will endeavour to gain the best possible price on your behalf. The rental prices are the current amount paid by the present owner, but this charge may be increased on the transfer of the business by between 10% and 15%, as allowed by Spanish law. The rents are subject to the IVA tax but this is reclaimable. We make every effort to describe each business as accurately as possible so that you will be able to shortlist those that best fit your requirements. A map is included so you are able to place the business within the island. As part of our service, Mallorca Properties Online SL will work from your shortlist of businesses to create a workable itinerary incorporating all the properties that you wish to view. We will take you to the individual properties and you will then have the opportunity to meet the present owners to discuss how the business trades at present. Remember: 1. Different properties come on the market throughout the year. You might not find the property most suited to you in your first visit. 2. Take time to find a business that you will enjoy. It is in all our interests that you succeed. Our fees and Commissions: The vendor pays our fees and commissions so that there are no extra charges, over and above the agreed purchase price, to you the buyer for our services. Your choice of business should be based on: 1. Location. Location. Location. Remember a business on the sea front is not necessarily the best place to be. A good location could be determined by how many people pass the door. 2. The cost of the business. Remember that you must allow for a certain amount of working capital for stock, decoration and other incidental expenses. 3. Choose a business where you can use your previous expertise and experience to help you in your new venture. 4. Do the homework again. Remember, "foot traffic" = potential customers passing the door. Click here for our enquiry form.

Location, location, location Your choice of properties in Mallorca From looking at our listings you will already have realised that there are many different types of businesses available at different prices and in different locations, around the island. Very few businesses have accommodation so it will also be necessary for you to rent accommodation nearby. You may find that prices vary between agents advertising the same businesses. This is usually caused by a vendor not managing to contact all of the agents to advise them of any change. If you see a business advertised at a lower price, rest assured that Mallorca Properties Online SL will be able to obtain the business at that price, or better, providing it is a "genuine" sale price. You will be able to choose from three types of property when buying your business: 1) A Leasehold (trespaso) Business This is by far the most common means of buying a business on the island. A landlord owns the shell of the building and your contract will enable you to rent the premises from him for the monthly rent shown on our listings. The lease is negotiated for a given period of time, usually 5 –10 years, and during this time the landlord is only allowed to raise the rent in line with current inflation levels published by the Spanish Government currently running at approximately 3% per annum. If at the end of the lease period you wish to continue using the property the landlord must offer you a subsequent term at no extra cost but he is allowed to raise the rent by up to 15%. You own the fixtures and fittings within the property and are able to change the décor as you wish. However, if you want to make changes to the structure of the building then you do have to gain the Landlord’s permission. It may be that you will want to move on before the full term of the lease has expired. When you then sell the business the landlord will be entitled to retain approximately 15% of the price “declared”. It is important to understand that the landlord cannot terminate the lease for any reason other than non-payment of the rent, and this termination can only take place through the legal system. Invariably this takes a considerable amount of time. 2) A Rental Business Occasionally rental businesses come onto the market, and this has the advantage that it gives you the opportunity to operate a business in your chosen field. This means that you will be able to gain a very clear picture of what it takes to run the business successfully. You will be expected to put down a deposit, which will be repayable when the property is returned in a satisfactory condition. The rent is either paid annually or monthly, and there is sometimes the added bonus of being able to buy the freehold of the property at a later date. 3) A Freehold Business Freehold businesses come on to the market infrequently, as the Spanish consider the rent from the property to be their pension and part of their children’s inheritance. These properties are obviously more expensive as you are buying not only the fixtures and fittings, but also the shell of the building. However, as this is a complete property you can borrow between 50–60% through the Spanish banks. You will also be liable to pay between 8-10% for taxes on the transfer price and other legal costs. REMEMBER... It is essential that you use a bonafide company for buying your new business, and provided that you follow the advice given to you on the purchase of a property, there is very little that should go wrong. Click here for our enquiry form.

Your ideal Business Please remember: Do not be tempted to buy any business on your own without the scrutiny and advice of competent individuals who are there to look after your interests, and who will make sure that your business will run smoothly from the start. As part of our service, Mallorca Properties Online SL are able to introduce you to competent English-speaking solicitors (Abogado) or accountants (Gestor) who will work efficiently on your behalf. WHEN you have found your ideal business having considered all of the options available and possibly after several visits to the island, you are now ready to proceed with the buying process! Your Option To Buy Agreement You make an offer for the business, which we will negotiate with the vendor on your behalf. This negotiation will include the price and the terms and conditions of sale. Further investigations will then take place to verify the existing licences, to check that the fixtures and fittings are in good working order, and that the business is debt free. In the event of any anomalies, money will be deducted from the purchase price of the business. The Option to Buy Agreement will state the particulars of both the buyer and the seller, terms of payment, and the date that the sale should be completed. At this point you will be required to pay a 10% deposit, which will be held in our customer account at Banca March, awaiting the completion of the purchase. Once this agreement is signed, the vendor undertakes to remove them business from the market. It is also important to understand that during the period of the option agreement, should any problems arise, regarding the legality of the business, your deposit would be returned to you.

LEGAL REQUIREMENTS FOR OWNING A BUSINESS Spain is a member of the European Community, (EC) so providing you hold a European passport, you have the right to live and work here and to be treated as a national of this country. In the event that one or more of you do not hold a European Passport, then it may still be possible for you to buy a business here. Mallorca Properties Online SL would be pleased to advise you on individual circumstances. The list that follows appears to be rather long and complicated, but as part of our service we undertake to help you acquire all the necessary licences and registrations. This way the burden of extra paper work and applications is removed, leaving you free to spend more time organising your new business. N.I.E. NUMBER All residents in Spain must have their own personal identification number. We will apply for this number for you. Without it you cannot trade legally. FISCAL LICENCE and SOCIAL SECURITY REGISTRATION * The Fiscal Licence is to show the taxable activity of your business. * The Social Security Registration is to enable you to reap the benefits of the Spanish equivalent to the British social security system, which includes health care and, after 15 years, pension rights. OPENING LICENCE When you buy your new business the current licence to trade will be transferred with the business. All businesses must have a licence, which clearly states its current use. FOOD HANDLERS CERTIFICATE If you are involved in handling food you have to attend a seminar in Palma and pass a simple exam. The seminar is given in Spanish and as part of our service we undertake to provide an interpreter in order that you easily understand the proceedings. I.A.E. TAX OFFICE REGISTRATION Each trade, business or profession is in a category of yearly fees payable to the government as income tax. This tax is paid on account quarterly. I.V.A. REGISTRATION This is the Spanish VAT rating. It is important to appreciate that there is no threshold of turnover, and all businesses are required to submit quarterly returns, which will be submitted by your Gestor (accountant). APPLICATION FOR RESIDENCY You can, and should, apply for residency in Spain, and this might take considerable time to process, it is only denied in very extreme cases. THE SALE CONTRACT On your return to the island to complete the transaction on your new business, a member of our team will again meet you at the airport and take you to your accommodation. This accommodation may well be an apartment near to your business, which has been arranged for you on a short-term lease. This will enable you to look around, when you are more settled, for long term accommodation which best suits the individual needs of you and your family. THE CONTRACT In your absence, Mallorca Properties Online SL, in conjunction with your Abogado or Gestor will have continued to check that the business is debtfree, and that all the necessary licences are in place. Even at this stage, if any irregularities are found, you are still entitled to withdraw from the sale and have your deposit returned in full. If possible the final contract will be written in English, but if it has been written in Spanish our translators will go through it with you carefully so that your obligations are clearly understood. The contract will be signed in the presence of the vendor and the Abogado, and it is then that the balance of the sale price will be paid. * Do not be tempted to pass over any cash, or transfer money to an offshore account to the vendor outside this meeting, as it will be very hard to trace and return. It is sometimes possible that an arrangement can be made with the vendor to stay and help you make a smooth transfer to your new business. They can introduce you to regular customers, discuss suppliers, delivery days and generally make you welcome on the island. COMPLETED !!!!! The business process is now complete, but you are not on your own, as our after sales service is now available to use, as often or as little as you like. Our aftersales service promises that: * Our office staff will be on hand to help as much as possible. All you have to do is ask. * Our Aftersales pack gives you valuable information by naming reputable professionals, contact addresses for various groups on the island, a comprehensive list of phone numbers and any other information we think you may find useful. * Remember. Mallorca Properties Online SL will do all we can to help you to settle in to your new life and become successful... all you have to do is ask. Click here for our enquiry form

The Mallorquin Lifestyle In this section we will endeavour to answer some of your questions about life in Mallorca, in order to help you make a more considered decision on your move to a new country. This is a huge decision... we know... the majority of our team made the decision to begin a new life in Mallorca with our families, and we are delighted that we made the move. The information that Jamie & Sheldon SL have added here is the sort of information that would have helped us to make more informed decisions on our future. It is also based on the questions that we are most regularly asked by our clients. However, if you should have any further questions do not hesitate to ask a member of the team... if we do not know the answer then we are happy to find someone who does. Language Various different Spanish dialects are spoken on the island but the most prevalent is Catalan Spanish, which is taught in schools. Although many of the Spanish can speak and understand English they appreciate people being prepared to converse in their own tongue. It is advisable that you learn basic Spanish. This can take the form of private lessons, individually or in groups, or as evening classes in the winter. Finance and Banking As part of the EC, the official Spanish currency is the Euro. Nearly all the major Spanish banks have branches in the resort towns, and most have a member of staff who can speak English. Many of the banks have arrangements with the High Street banks in the UK, so that transferring funds is a relatively easy process, usually taking 5 days. Our own bank, the Banca March has a branch in East Cheap, London. It is advisable to keep a UK bank account available to use, so that cash withdrawal is easy when you visit the UK. You may use most credit or debit cards to withdraw money from a UK bank account using a Spanish cash point. All you need to open a bank account in Mallorca is a copy of your passport and a Spanish address. It will take approximately seven days for you to receive a Euro chequebook. A cash card has to be ordered separately and can take up to two weeks to arrive. It is advisable to choose a branch near your business so that banking does not become a chore. There is no equivalent to the British Building Society so finance for property and business purchases is obtained through the banks. It is not possible to raise finance for a business until you have produced accounts for several years’ trading. Health Care Before all the relevant paperwork is completed it is advisable to gain the form E1 11 from a UK post office, which entitles you to free National Health Service facilities. As a “self employed” business owner you have to contribute approximately £140 per person per month to the Social Security System. You will then be able to sign on with a doctor at your local health centre and use the hospitals without further charge. There are also many private health service plans available at approximately £30 per month, which would enable you to use one of the many private clinics. Dental treatment is generally private, with charges roughly equivalent to those in the UK.

Education As in England there are two types of education available to you on the island. State Schools The state schools are free but you are expected to buy the necessary exercise books, and infant children are required to make a contribution towards stationery. The school day is shorter. The high summer temperatures mean that the long summer vacation is approximately 3 months, but there are fewer long holidays throughout the year. Overall the standard of education is high. There is homework and continuous assessment, so that parents become an integral part of the learning process. All the lessons are taught in Spanish and a basic knowledge of the language before you arrive would be useful. In some schools foreign children are given extra Spanish lessons so that they understand more quickly and make new friends. Wherever you go it does take time for children to adjust to a new school ... be patient... they will settle eventually. The Private Schools You can also choose to send your children to one of the four free-paying British and American International Schools on the island. Here they can follow the GCSE and A level syllabus as in Britain. The classes tend to be small so this encourages the percentage pass rate to be high. The children can move on to UK Universities generally having achieved a standard higher than the national average. Pets There are many good vets with practices on the island so that you know your pet will be well looked after. Indeed, there is an English qualified vet located in the south of the island whom we can thoroughly recommend. Nick Murgatroyd BVSc MRCVS can be contacted direct on 0034 971 404 459 and has a very informative website: www.palmavet.com. Nick has many years' experience and originally worked in the Southwest of England. You are able to import pets into Spain without the need for a quarantine period. However you will need to have a valid export licence, which will entail each of your pets being inoculated against rabies and other infectious diseases. They will also need to be microchipped. Your English vet will have to verify that these procedures have been carried out, and an export licence is then granted by DEFRA. Should you wish to return to the UK with your pet in the future, you will have to acquire a Pet Passport or be prepared to put your pet into quarantine kennels for six months. It is best that you ask your vet to explain the up-to-date regulations so that all the paperwork is accurate and your pet can travel smoothly to Mallorca. You can transport your pets by road using the ferries or the Channel Tunnel. It is also possible to fly your animal airfreight, or have them transported on the same flight as yourself. Only specific airlines such as British Midland, Britannia and British Airways have aircraft with heated pressurised holds, which can accommodate live animals. By contacting the airlines you will be given the necessary details for transporting your pet. Click here for our enquiry form

Accommodation: Rental When you arrive in Mallorca it is advisable to rent a property near your business for a short while, so that you get to know the island before you decide on the area where you wish to live. It is hard to give any accurate cost for the rental price of a property as that is largely determined by its location, the size of the property and amenities. Those properties on the coast are generally more expensive than those inland. Prices for a long-term let tend to be lower than for a short-term let, which will be much higher during the major holiday periods. For a long-term let you will be expected to sign a formal contract and pay for two months as a deposit and one month’s rent, in advance. Freehold If you choose to buy a property, you can negotiate a mortgage through the Spanish banks, which is based on the bank’s valuation of the building. You will be able to borrow approximately 70% of this value, the remainder taking the form of a deposit. You will then pay approximately 8-10% of the declared purchase price as tax. The mortgage rate is currently about 5%. Removals International removal companies are listed in the UK yellow pages, however we are able to suggest various companies based on the island who might give you a more competitive rate than those in the UK. International removal rates are based on volume, and you will be quoted a price per cubic metre of goods to be carried. The rate will also depend on the level of service you require. These companies should insure your goods and deal with Customs formalities. Remember that if there are more valuable items you ensure that there is sufficient insurance cover. Transport A regular cheap bus service runs throughout the island. As a resident you are entitled to discounts on public transport, flights and ferries throughout Spain. Vehicles You can use your British driving licence for 6 months, but after that time, by law, you should exchange your UK licence for a Spanish one. As in the rest of Europe, buying a vehicle on the island is relatively cheaper compared to the price that you would pay in the UK. Petrol and diesel fuel are cheaper. The road fund licence is payable annually, the cost varies dependent on the size of engine and starts at approximately £60 per annum for a small car. MOT tests are required after 4 years and then every 2 years. You can import your righthand drive British vehicle to Mallorca, however there are disadvantages; on occasions your vision might be impaired e.g. on roundabouts, and when overtaking. When you first arrive on the island it is advisable for you to rent a car for a time, whilst you organise your business and wait for the necessary paperwork to be processed. As part of our service we can recommend various car hire firms who offer economic longer-term car hire rates.

Public Services: Water The water standard is in line with EEC regulations and as such is drinkable although most people prefer to buy bottled water, or to use a home waterfiltration and cooler unit, as the water on Mallorca generally has a higher mineral content. Mains water is generally metered and bills submitted every 2 months. The cost of water is cheaper than in the UK and payment can be made by direct debit through your bank. Electricity The Mediterranean climate ensures that you will need to use less electricity on the island than you would do in UK. Electricity is less expensive than the UK. Generally properties on the island are 220 volts, so that you can use electrical equipment purchased in Britain. It is advisable however, to check the electrical voltage before you rent a property, so that you can be sure that you can use all your appliances. Gas It is most likely that some of the appliances in the house you rent will be running on bottled butane gas. This is relatively cheap to buy at less than £6 a bottle. This is either purchased at a depot, or directly from the door-to-door deliveries that operate in every area, several times a week. Telephones         Before you have a permanent address on the island the best option is to use a Spanish “Pay as you Go” mobile phone. In some circumstances, it is possible to unlock a British mobile phone, which will then enable a Spanish sim card to be used. “Pay as you Go” mobile phones can be switched onto a monthly-billed contract at a later date if required. Telephones installed into domestic properties and businesses properties cost approximately £80 to install. Domestic properties are billed every two months and business properties are billed on a monthly basis. Dial-up-internet, as well as ADSL, is available to both residential and business users as in England. The standard speed is 512KB, however different speeds are available at extra cost. The cost for a standard ADSL connection is approximately £28 pounds per month. Dial-up connections are usually paid on a per minute basis and individual network service providers’ costs vary. Electrical: White Goods You are able to use any electrical goods you have in the UK on the island. You can either change the electrical appliances to a two-pin plug or use an adaptor with your existing three-pin plug. Television and Radio Local and National television channels are free and provide a wide choice of viewing. You may wish to install a satellite system. It is possible to receive Sky Digital with a 140 cm or 150 cm dish, but you must retain a UK address and bank account for the subscriber card. Alternatively, there are two Spanish systems, either Via Digital or Canal+. These programmes are broadcast in Spanish, however many of today’s programmes have dual language capability and English can be selected. There are many radio stations which play a mix of English and Spanish music. Religion The Catholic faith is the predominant religion in Mallorca. Each village has their own Saint’s days and fiestas based on the local church. Some of the minorities’ religious faiths have active congregations on the island and contact numbers for these are available upon request.

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