Buy hotel in Mallorca
Due to the steady growth of the hotel market in Mallorca, it is still a solid and interesting investment to run your hotel business in Mallorca. Either take over the hotel operation (hotel management), or start a completely new hotel project, in Mallorca is the perfect place to do it. The second option, however, is only limited possible to realize, and we also recommend to buy only those properties that really has a valid hotel license available.
Mallorca is and remains one of the most popular vacation destinations in the world, and this is also reflected in the hotel real estate market.
When operating a hotel, all permits and licenses should be checked, from the municipality and the tourism office. In addition, the property must be checked to ensure that it is free from encumbrances. Often it happens with hotels that the company is sold, and not the property itself, so a detailed due diligence/risk assessment is important.
When buying a hotel, you should also carry out a detailed market analysis, and prepare a concrete business plan for the operation and the assessment of the next few years. In doing so, one should not only focus on the existing annual financial statements and key figures, but also include statistical future projections. A professional but also external (i.e. not commissioned by the seller) valuation should not be missing in the purchase process.
Incidental purchase costs for a hotel purchase in Mallorca
- Private person bu ys (natural person) the hotel: if a natural person buys the hotel (and not the owner company) the VAT is 21% (IVA) of the price, and the stamp tax with about 1% from the price (Impuesto sobre actos jurídicos documentados).
- Company buys (legal entity) the hotel: Generally, this is the common way, due to the more favorable taxes in this variant. The best thing to do is to register a “Spanish GMBH” (i.e. a Sociedad limitada) with your trusted tax advisor. This type of company in Spain can be incorporated with minimal share capital, and also the incorporation costs are low (with notary, lawyer and registration fees around 3,000 €).
One of the most important things when buying a hotel is to have a trusted person on site who knows everyone.
There are of course other variations and some tips and tricks that can be used when buying a hotel in Mallorca, where we are very happy to help you if you are interested. The most important thing is to have all the documents that justify a possible purchase from the financial point of view, a trusted person on the spot who will contact the hotel owners. (also discusses all important points as the negotiation is conducted) and of course a good team of tax advisors, lawyers, architects and financing experts.