The first thing that anyone considering a Tenerife bar for sale will always ask is, “Let’s see the accounts!” It’s a question that should be asked by anyone who wants to invest in a Tenerife bar or cafe, but it can be a difficult one to answer for many successful bar owners on the island. Your natural reaction may be to shy away from a bar for sale without detailed accounts, but that might mean that you are ignoring some of the most profitable bars in Tenerife! Sounds odd? Read on and find out why!
The answer is in the way Spain taxes businesses like bars, cafes or small restaurants. There are two systems of tax and a Tenerife Bar owner can choose either one at the end of a tax year. A bar may be on the estimacion directa system, which is similar to the accounting systems you will be used to. It’s a double entry system that calculates your costs and income just like accounting systems anywhere, and you are charged on your profit.
The other option for a Tenerife Bar owner is the modulo system which was designed to simplify accounting for bar owners. The tax you pay is based on the average profit the taxman thinks that a bar of your type should make. This assessment scheme calculates the bar’s performance based on all sorts of factors such as the number of employees, the square feet of the premises, the number of tables, the length of the bar etc. It uses a formula to calculate the expected return and the tax is based on that. No Accounts. No VAT.
So if you ran a bar in Tenerife that was highly profitable, which would you choose?
Its a no-brainer! You would choose the modulo system that is only going to charge you for what an average bar takes. If your bar is above average in Tenerife, your profits are higher and you pay less tax than you would on the normal tax system. And an added bonus is that that your tax returns are a doddle and so are your accounting bills!
The lesson is that if you are considering a Tenerife bar for sale and you see one that you like without accounts, don’t dismiss it out of hand. A bar like that may have no accounts for the very reason that it is more successful and profitable than other Tenerife Bars.