Traspaso: taking over a bar or restaurant in the Canary Islands

What a traspaso buys you, and what it doesn't

I've lived in the Canary Islands since 2014 and been running a business here since 2017: the traspaso is the route almost everyone takes to open a bar or a shop on the islands without building it from scratch. People arriving from abroad sometimes confuse it with a straightforward purchase, and that's exactly where the difference lies: the unit itself stays the landlord's.

• You get the right to take over the lease on the unit, on the terms that lease already sets out.
• You get the licences and permits that allow that business to operate in that unit.
• You get the fittings, equipment and stock, if they belong to the seller and aren't rented.
• You pay for the goodwill: the customers, the location, the fact that you can open the shutters tomorrow.
• You don't get the building: that's bought in front of a notary, and it's a separate transaction.

My advice is to flip the order of the questions: the lease and the licence first, the kitchen and the chairs after. Equipment can be bought again; a lease that runs out in two years' time can't.

The lease: taking it over, its length, the rent

A commercial unit falls under the arrendamientos para uso distinto del de vivienda of the Ley de Arrendamientos Urbanos, which are governed first by what the parties agree, and only in the absence of any agreement by Title III of that law. In practice: there's no minimum term the way there is for homes. The term is whatever the lease says, and it's worth reading before you talk about price.

1. Assigning the lease When the unit is used for a business or professional activity, the law allows the tenant to assign the lease (cesión del contrato) or sublet it without the landlord's consent. That's the mechanism the traspaso rests on, but it only applies in the absence of an agreement to the contrary: many leases say otherwise.
2. The rent increase The same law gives the landlord the right to increase the current rent by 20% when the lease is assigned or the whole unit is sublet, and by 10% for a partial sublet. It's a cost that turns up the day after you sign.
3. Notifying the landlord An assignment or sublet has to be notified to the landlord in a legally verifiable way (fehaciente) within one month of being agreed. This isn't a formality: the landlord can terminate the lease outright if it's assigned outside those rules.
4. The deposit For a lease not used as a home, the compulsory deposit (fianza) is two months' rent. I always ask who paid it, and whether it's returned to the seller or kept as security for the new tenant.
5. If the unit is sold Whoever buys the leased unit takes over the landlord's rights and obligations, except in the cases of registry protection set out in the Ley Hipotecaria.

There's also a right that clients from abroad don't expect: when the agreed term ends, if a retail business has been run in the unit for the last five years, the tenant may be entitled to compensation from the landlord, but only if they gave four months' notice of their wish to renew for at least another five years at market rent. It isn't automatic: it only exists if the dates were respected.

Licences: comunicación previa and change of owner

In the Canary Islands, opening a unit that makes noise, cooks food or receives the public falls under Canary Islands law on actividades clasificadas: this classifies activities that could cause a nuisance, affect health conditions, harm the environment or create a risk to people or property. A bar and a restaurant both fall into that.

• The general regime for installing, opening and starting up these premises is the comunicación previa (prior notification); prior authorisation remains the exception, set by decree of the Canary Islands government for the higher-risk activities.
• Opening has to be preceded by the sector-specific authorisations or equivalent permits that type of activity requires: the licence doesn't cover everything on its own.
• When the business changes hands, a new licence isn't needed: the transfer doesn't require a fresh application for the actividad clasificada licence. But the old or new owner has to notify the change to the body that granted it.
• The notification is made in writing within one month of the change of ownership, with a copy of the transfer document. The same route applies to activities under the comunicación previa regime.
• If it isn't notified, the old and new owners are jointly and severally liable for the obligations arising from the licence between the transfer and the notification: I put that on the calendar for signing day.

Before letting anyone sign, I check that the licence or notification exists, is registered to the seller, and covers the activity my client wants to carry out: a kitchen isn't a bar, and a terrace isn't automatically included.

How I assess a business before recommending it

I don't publish estimates or multipliers. I always ask for this list: if one answer is missing, that's where the problem is.

• The full lease: remaining term, rent, review clauses, who pays IBI and the comunidad fees, and the clauses on assignment.
• The licence or the comunicación previa: who it's registered to, for which activity, and with what conditions and opening hours.
• The accounts and tax returns for the last few financial years, not figures written by hand on a piece of paper.
• The utilities: the electricity and water bills tell you whether the turnover you've been told about is actually plausible.
• The staff: how many people work there, on what contracts and for how long. Get an employment adviser to look at this before signing.
• The equipment: what's owned and what's rented, how old it is, and what will need replacing straight away.
• Any outstanding debts on the unit, and seasonality: a tourist area and a residential neighbourhood follow two different curves.

The price that comes out of this isn't a number from a table: if the lease has few years left to run, the goodwill is worth little.

Tax and social security: prepare before, not after

The choice between being an autónomo (self-employed) and setting up a Spanish company is made before signing, not the Monday after you open: it changes who signs the lease, who the licence is registered to, and who's liable for the debts. And either way, you need the NIE first.

• Decide on the legal structure before you negotiate: signing the traspaso as an individual and then moving it into a company means redoing the whole process.
• Get a local asesor fiscal (tax adviser) and an employment adviser to guide you: Spanish filing deadlines come round often.
• Ask your adviser how your transaction will be taxed before you agree the price: it depends on what's being transferred and who's transferring it.
• Budget for the settling-in months: contributions, rent and wages start from day one, takings don't.

This guide is general guidance based on the legal texts cited at the bottom of the page, not legal or tax advice. Every lease and every licence is its own case: get help from a qualified professional in Spain for yours.