When considering acquiring a business through a transfer, one of the first questions that comes up is: how much does the property owner receive in a business transfer? This is a key question, especially when you're looking to maximize your investment and optimize initial costs. In this article, we’ll clarify exactly how much money the property owner typically receives, which factors affect this amount, and how to negotiate effectively.

What is a Business Transfer and How Does it Work?

A business transfer is an operation through which a tenant transfers the management and assets of an operational business—including customers, furniture, licenses, and equipment—to another person. But what role does the property owner play in this process?

Although the owner isn't directly selling the business, they're entitled to receive financial compensation for allowing a change of tenant. The exact amount depends on various factors detailed below.

Factors Influencing the Amount Received by the Property Owner

Several variables determine how much the property owner receives in a business transfer. The most significant include:

Type of Rental Contract and Its Impact on Transfers

The rental contract plays a decisive role in calculating the owner’s share. Two main scenarios exist:

• Older contracts (signed before May 1985): By law, the owner typically has the right to receive between 10% and 20% of the transfer amount.
• Modern contracts (signed after May 1985): There's no legal obligation for the owner to receive a percentage. Thus, the owner's share depends entirely on negotiations between the parties.

Location and Commercial Value of the Property

The property’s location is also crucial. The more central and commercially valuable the premises are, the higher the amount the owner usually demands. For instance, commercial premises located in central Madrid or Barcelona will typically involve higher transfer fees than premises located in less busy neighborhoods.

Agreed Conditions Between Tenant and Owner

Often, the property owner and tenant include specific clauses regarding transfers in their rental agreement. If such clauses exist, the percentage or fixed fee payable to the owner will be clearly stated beforehand.

Differences Between a Business Transfer and a Lease Assignment: Does it Affect What the Owner Receives?

Although often confused, business transfers and lease assignments (cesión de negocio) are distinct concepts:

• Business transfer: involves the sale of the entire business, including customers, assets, and licenses, keeping the original lease agreement intact.
• Lease assignment: simply involves transferring the rental contract to another person, without necessarily selling the business itself.

In lease assignments, the property owner typically receives no extra compensation unless explicitly agreed, whereas in business transfers, the owner commonly requests financial participation.

Must the Property Owner Pay Taxes on the Amount Received from a Transfer?

Yes. The property owner receiving money from a business transfer must declare it in their income tax (IRPF) return as either rental income or a capital gain, depending on the specific situation. Therefore, owners usually consider taxation carefully when negotiating their compensation.

How to Negotiate with the Property Owner to Reduce Their Share in the Transfer?

Negotiation with the property owner is crucial to minimizing the costs involved in a transfer. Here are some recommendations:

• Clearly justify the actual value of the business, avoiding inflated valuations.
• Propose alternative agreements, such as slightly increasing monthly rent payments in exchange for reducing the owner's initial fee.
• Seek advice from professionals familiar with the local market to strengthen your negotiating position.

Conclusion: Is Paying a Business Transfer Worthwhile and How Much Influence Does the Owner Have?

As you've seen, how much the property owner receives in a business transfer depends mainly on the existing contract, location, and prior negotiations. Although this might seem like an additional cost, it can often be worthwhile if the business promises immediate profitability.

For a beneficial transaction, smart and transparent negotiation is essential, aiming for an agreement beneficial to both parties.

If you're considering a business transfer and want to negotiate the best possible terms, at Business in Spain we can help you. Contact us today and leverage our expertise to ensure a successful transfer.