Leasing business premises: commercial lease and key-money transfer (traspaso)

Terms used

• Fianza — The fianza is the legal deposit, two months' rent for a commercial lease, which the landlord lodges with the regional body.
• Traspaso — A traspaso is the sale of a running business together with its lease, fittings and licence, for a price called key money.
• IVA — IVA is Spain's value-added tax, charged at 21% on commercial rent.
• Modelo 115 — Modelo 115 is the quarterly tax form used to pay the 19% withholding on commercial rent.
• ITP — ITP is the transfer tax on certain property transactions, which does not normally apply to a commercial lease.
• AJD — AJD is stamp duty, which can apply to documents signed before a notary.

Key rules

• Fianza: A commercial lease requires a fianza of two months' rent, which the landlord lodges with the regional body.
• Contract first: The contract overrides most default rules, so term, updates and exit terms must be agreed in writing before you sign.
• Early exit: You have no automatic right to leave early unless the contract gives it.
• Traspaso: Before paying key money, confirm the licence can be transferred and the landlord consents in writing.
• Tax: Budget 21% IVA on top of the rent, plus a 19% withholding if you are a business or professional.

How a commercial lease differs from a home rental

A commercial lease is mostly what you and the landlord agree in the contract. Residential tenants get many protections that the law fixes. Business tenants get far fewer. Read the contract as if it were the whole rulebook, because in most cases it is.

Freedom of terms

You and the landlord can set the length, the rent, how the rent is updated and any extra guarantees. There is no minimum or maximum term.

If the contract says nothing about length, the default is simple. Rent set per year means the lease runs year to year. Rent set per month means it runs month to month. If you stay on after the end with the landlord's consent, the lease renews on the same basis.

You have no automatic right to leave early. Agree the notice period and any exit penalty before you sign. The landlord can end the lease early only for serious reasons, such as unpaid rent, unauthorised subletting or works, a nuisance activity or a change of use.

Compensation for the tenant at the end of the lease (for the customers you built up) exists only in limited cases. Do not count on it.

Deposit

The fianza is two months' rent, and the landlord lodges it with the regional body. Ask which body that is and when it was lodged. Lodging rules differ by region, and Madrid and Catalonia have their own procedures.

The landlord can also ask for extra guarantees, such as a bank guarantee, a personal guarantor or a larger deposit. Negotiate these before signing.

Handing the lease on: assignment and subletting

Assigning means passing the whole lease to someone else. Subletting means renting out the premises to someone else while you keep the lease.

• You can assign without the landlord's consent only if you are selling the whole business with the premises. Even then, you must notify the landlord in a reliable way, such as a registered letter.
• If the lease is silent, the landlord can claim 10% of the price or a 10% rent increase on an assignment. The contract can change or exclude this.
• Subletting needs the contract to allow it, or the landlord's consent. The sublet rent cannot exceed the rent of the main lease.
• If you assign, the new tenant takes over your rights and obligations, but the answer on whether you stay liable is in the contract. Ask for the landlord's written release if you want to be free of it.

Ask the landlord to confirm in writing that you can assign or sublet if you might need to.

Buying a business: the traspaso

A traspaso is the sale of a running business together with its lease, customers, fittings and licence. The price is called key money. The decision block below helps you choose between a traspaso and a new lease.

Before you pay anything:

• Check that the seller holds the municipal activity licence and that it can be transferred to you.
• Check the seller's debts: utilities, taxes, social security and suppliers.
• Confirm the remaining lease term and rent, and get the landlord's written consent to the traspaso.
• Review existing contracts (suppliers, insurance, franchise) and the stock and equipment inventory.
• Check the employees. If staff come with the business, you normally take over their contracts and some of the liability.
• Ask what tax applies to the price. It can include 21% IVA in some deals, depending on how the deal is set up.

Have a notary or lawyer draft the agreement, and pay in stages rather than all at once.

Taxes on the lease

Add 21% IVA on top of the rent when you budget. Some exempt activities are an exception.

If you are a business or professional, you normally withhold 19% of the rent (before IVA) and pay it quarterly through Modelo 115. The withholding does not apply in some cases, for example when the landlord is exempt. Ask your adviser whether it applies to you.

You normally pay no ITP on the lease, since IVA applies. Stamp duty (AJD) can apply if the lease is signed before a notary. The fianza itself is not taxed.

Choosing between options

Should you take a new lease or buy a running business through a traspaso?

• Sign a new lease: You are starting from scratch, want to negotiate your own terms, and are happy to apply for your own licence.

• Buy a business through a traspaso: You want a business already running, with its lease, fittings, customers and licence. You pay key money and take on the remaining lease term.

Choose a traspaso only if the seller holds a transferable licence, the debts are clear, the remaining lease term and rent suit you, and the landlord agrees in writing. If any of these fails, a new lease is safer.

Timeline and deadlines

• Agree the term, notice period and any exit penalty in the contract: before you sign

• Landlord lodges the fianza of two months' rent with the regional body: after the lease is signed

• Stay on after the lease ends with the landlord's consent, and it renews on the same basis (yearly for annual rent, monthly for monthly rent): if you stay 15 days after the end date

Checklist

• Read the contract for the term, rent updates, notice period and any penalty for leaving early.

• Confirm the fianza is two months' rent and ask which regional body the landlord will lodge it with.

• Set up the 19% withholding on the rent, paid quarterly through Modelo 115, if you are a business or professional.

• Check that the seller holds the activity licence and that it can be transferred to you before paying key money.

• Ask a notary or lawyer to draft the traspaso agreement and pay in stages.

Frequently asked questions

Can I leave a commercial lease early?

Only if your contract gives you the right to leave early, because the law gives a business tenant no automatic early exit. Most contracts set a notice period or a penalty, so read that clause before you sign.

Do I pay IVA on top of commercial rent?

Yes, you pay 21% IVA on top of the rent, apart from a few exempt activities.

Can I sublet commercial premises to someone else?

Yes, but only if your contract allows subletting or the landlord agrees.

Do I stay liable if I assign my commercial lease?

Yes, the original tenant stays liable after assigning the lease, because the new tenant takes over your rights and obligations. The landlord may also claim 10% of the price or a 10% rent increase unless the contract says otherwise.