Renting business premises in Spain
When renting an office or business premises in Spain, it is important to shop around and visit many agents in order to find the premises that best suit your business needs.
When looking around you will very often find that the same premises will be listed with several agents. This is quite typical in Spain. The rental agents will all charge different commission rates, so it is important that you shop around and negotiate the best price, as well as the conditions.
Once you have found suitable premises at the right price, you will be offered a contract to sign. Make sure you read the contract fully and get advice on any points where you are not clear. If your Spanish is not so good, make sure you get it translated.
Normally a rental contract will be for five years with a minimum period of one year. Some contracts may ask for a longer minimum period but you do not have to agree to this as legally you only have to agree to a one-year minimum.
There will be many clauses in the contract about who pays for what, such as repairs, cleaning/maintenance of communal areas/lifts and installation of utilities such as water, electricity and gas. Make sure the utilities are connected and working. If the premises are old or have been empty for a while and you are to be held responsible for connecting these, then you could be letting yourself in for a huge bill!
If you are taking over the premises from an existing tenant, try to ensure that the utilities are not disconnected otherwise you can be waiting many weeks for re-connection. It is common in Spain with utilities to change the account holder name and bank account number the day you take over the premises. You will want the utility bills in your company name in order to claim them as a business expense.
Usually, the landlord will ask for an aval (bank guarantee). The amount of the aval can vary from two months’ rent to one year’s rent. Some owners will increase the amount of aval when dealing with foreigners. The aval will need to be made by your Spanish bank in favour of the landlord. You will need to deposit the value of the aval into your bank account, this amount will be set in reserve.
Once you have negotiated the contract, you can then sign it, at which point the landlord will ask for the aval documents, the first month’s rent, and often a deposit of two months rent. The regular monthly rental should be paid by direct debit from your Spanish bank account to the landlord’s account, normally the first week of every month or as stated in the contract.
Normally the contract will be in the name of your company, so you need to make sure that you receive invoices for the rental, showing the company name and CIF or VAT number. The invoice will show the VAT which is recoverable through the normal VAT reporting system. The invoice will also show withholding tax. This is a system used in Spain by the government so that the landlord ‘pre-pays’ some of their tax on the rental income.
There are many landlords, particularly private owners, that do not want to give invoices as they want to treat the income as undeclared. Do not accept this, as it is illegal in Spain – insist on official VAT invoices.
New laws have been introduced whereby the utility companies are now to report to the government the changes of names on utility bills in order to try to catch these people.
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