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Residents Guide – How to start a business

CIF Number:

The first thing you need to do is register your company so you need to apply for a Codigo de Identification Fiscal this is commonly referred to as a CIF number. and identifies a new company for tax purposes. To apply for this a company representative should contact the Tax Authorities Office the Delegacion de Hacienda of the Agencia Tributaria.

Documents Required:

  1. Official form 037 -Fully completed and signed by a company representative or by one of the members who has signed the application for a Negative Name Certificate made to the Central Companies Registry.
  2. Copy of the Draft Deed of the incorporation of the company Identity Document.-By the signatory of the application or if the signatory is not available then by the power of attorney. This will grant you a temporary CIF which is valid for six months.

POINTS TO NOTE:

  • Every business has a unique licence.
  • Some businesses need several licences, eg supermarkets, food, drink, cigarettes.
  • All businesses need an application for an Opening Licence before you may begin trading.
  • Application fees vary depending on which municipality you need to apply to.
  • After application the local tax for the licence (IEA) is paid annually to your Town Hall.
  • If you want to trade all over an island you need a National Licence.
  • Expect other requirements eg music licence for bars.
  • Only an opening licence makes a business legal. When buying a business check this is held.
  • Rental Contracts for businesses need to be treated with extreme caution check all landlord rights.
  • Do not buy a business without having it notarised at the Notary Office.
  • Check the Town Hall will allow your premises to operate your chosen venture.
  • Unless you can read Spanish do not proceed without a professional. Business ventures are always risky be vigilante and cautious and use the services of a good abogado. (Lawyer)

BUYING A BUSINESS:

Do not hand over any money until you have seen copies of the following documents:

  • The Opening Licence – Indicates exactly who own the business and if they have the right to sell.
  • Rental contract for premises. – Shows existing tenants rights and if he is allowed to transfer rental contract. This is rare and the owner of the premises has the right to increase the rent and take a percentage of the leasehold exchange.
  • An electricity contract.
  • A telephone contract.
  • Basura in Alta refuse collection agreement.
  • All licences necessary for trading.
  • Copy of the contract of sale.

Any money to be paid should be paid by certified cheque and handed over during the exchange at the notary office where the seller should hand over all the documents to formally transfer ownership to yourself.

NOTE:

To ensure safety in business and protect yourself from possible fraud it is always better to use a registered law firm. Caution could prevent the loss of potentially large sums of money.

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