Spain

A Trip Across Europe –

Entrepreunerhip And Tourism

1.TAXA)ABOUT THE PRODUCTS

In Spain the purchase tax that it is charged on products is VAT (VALUE ADDED TAX). The rate depends on the type of product. On anything purchased in travel agencies, customers pay VAT at the rate of 8%.

Consumers are liable to pay VAT whereas the companies act only as tax collectors. Depending on where they contract their products, travel agencies are faced with different types of VAT depending on the countries they work with and their legislation.

1.b. FOUNDING THE COMPANYTax and expenses associated with setting up a

Private Limited Company.APPLICATION AND CERTIFICATE OF AVAILABILITY OF THE NAME

(tariff+ courier) 21'92€

APPLICATION AND CERTIFICATE FROM THE REGISTRY OF TRADEMARKSAND PATENTS (Apply for trading name and logo) 138'94€ + 16'40€

BOND INCORPORATION (Responding to the obligations applicable to offering services to a third party) 300€

MONIES INVESTED IN THE ACCOUNT OF THE COMPANY WHICH CONSTITUTE THE CORPORATE CAPITAL 3000€

MEMORANDUM OF DEED OF ASSOCIATION AND NOTARIAL APPROVAL 210'45€

PROPERTY TRANSMISSION TAX AND LEGAL DOCUMENTS 1% of corporate capital 30€

APPLICATION FOR UNIQUE TAX CODE (ID Number) FREE

REGISTRATION ON THE PROVINCIAL BUSINESS REGISTER 123'78€

LEGALIZATION AND APPROVAL OF OFFICIAL BOOKS ON THE BUSINESS REGISTER 50€

ADQUISITION AND APPROVAL OF BUSINESS BOOKS AND WORKERS´ REGISTER 35€

REGISTRATION IN THE REGISTER OF THE ANDALUSIAN TOURISM BOARD 130€

2. PERMITS REQUIRED

The most important permits are:

a) Opening Permit.

b) Travel Agency License.

2.a. OPENING PERMIT This is the document which certifies that the premises are

suitable for the stated activity to be carried out without causing nuisance to others.

All premises must have this license. Only artists and craftsmen are exempted as long as they are carrying out their activities in their own home, not making direct sales to the public and without disturbing or causing a nuisance to the neighbors. The opening permit is non-transferable and belongs to the owner of the business. The license is issued by the Town Hall.

A.1) How long it takes to obtain a license. When all the appropriate documents have been presented, it is

necessary to wait for a response from the Town Hall. They may accept your request or ask you specific changes. The time it takes the Town Hall to make its response will depend on each individual. Town Hall, but normal circumstances should be no more than three months.

A.2.Cost of the licenses Establishments with such activities are subject to a declaration of responsibility

or to an opening permit. In the next chart, S represents the surface area assigned to the activity and K is the equivalent to 272.69 €. The premises we have chosen are in Málaga centre with a total area of 72 m2 .The formula works as follows:

272,69+272,69/25 (72-50) = 512,66 €

Intervals (m2) Rate (€)

S greater than 50 less than or equal to 100 K + K/25 (S - 50)

A.3) What kind of qualification is necessary to obtain the license.

You do not need any special qualification to obtain this license

A.4) Business Plan

It is not necessary to present officially a business plan.

2.b. TRAVEL AGENCY LICENSETo obtain a license to start a travel agency you have

to fill an application form addressed to The Tourism Board that will be put before the Provincial Tourism and Sports Office. The application should include:

- Company unique tax code ( you can obtain it in your local tax office).

- Insurance: To fulfill the obligations for the provision of services.This should cover three blocks of a minimum of 150,253 euros each.

1st Operating civil liability.2nd Derived or subsidiary civil liability.3rd Responsibility for damage to private property.

2.b. TRAVEL AGENCY LICENSE- A copy of the rental contract of the premises attributed to the

company or to the civil person who has applied for the license.- The premises must have the following characteristics:1st It must be clearly different from other premises and offices

adjacent/ attached to it. It must have a clearly identified free public entrance.

2nd In a visible place, a sign which clearly identifies the company, including its unique identification number pertaining to the Tourism Registry, must be placed.

- Bond incorporation documents.- Documentation requested by the Registry of Trademarks and

Patents, to guarantee the company has applied for the trading name. If the trading name is different from the legal name, this should have been communicated to the Tourism Board.

2.b. TRAVEL AGENCY LICENSE- Declaration of the initiation of the commercial activity and

census declaration. This document can be obtained in the local Inland Revenue Office.

- In the case that all has been presented correctly, the Tourism Board will give the appropriate license together with an identification number and the legal classification of the company.

- Once all the documents have been submitted, it will take the General Tourism Board a maximum of 3 months to make a response.

If there has been no response, then by default, the license has been awarded to the company.

3-FINANCE.

A)INTEREST FOR LOANSCompanies can ask for money from banks and financial

institutions. Among others they can grant:Credit Lines: The company has only to pay interest for

the amount of money spent. The rate of interest varies depending on the duration of the loan and the guarantee provided by the company.

Loans: interest can be from 9% to 12% approximately, depending on the loan rates and the repayment schedule.

Leasing: This is a type of rental with purchase option for property. The company can rent goods for a period of time depending on the type of good, and once the rental contract has finished the company has the option to purchase the product at its residual value.

B)SUBSIDIES -Loans to young businessmen have been

offered by the Ministry of Industry, Energy and Tourism ( ICO) . The aim is to encourage young people to start their own company and give them better access to credit.

-Investments financed by ICO are: • Fixed assets purchase• Current assets purchase

-Credits conditions•Loan to a maximum value of 50.000 €.•6% tax rate•0,5% Opening price•0.% Profitability study•No bank guarantee•The company designed as beneficiary of these credit facilities should provide at least a 15% of the loan as a own capital•4 years repayment period•proprietors´ age limit: 35•Early repayment: 2% expenses on the paid capital

C)HOW TO OBTAIN THESE SUBSIDIESThese subsidies can be given to any SME (Small, Medium size Enterprise) if they comply these requirements.•The commercial activity and the loans should be based in Spanish territory•The market research should include some innovative aspects regarding the products, the activities, the management •Promoters´ declaration of the company owner’s commitment to develop the business plan•To be a SME as stated by 2008 European Union rules

It must not be a real estate company or a financial institution

4-RUNNING COSTS.

ONE QUALIFIED PERSON:AVERAGE SALARY: Basic wage is 1.220,24 € * 16 payments for a worker with civil responsibility at level 2, i.e. a manager of a branch, main office…TAX:The employer must deduct a percentage of the employee´s salary for tax purposes and pay it into the local Inland Revenue office account according to the following:

Intervals- Personal income tax 2011/2012 Tax base

From To Deduction Add Total 2012

0,00€ 17.707,00€

24,oo% 0,75% 24,75%

17.707,00€ 33.oo7,00€ 28,00% 2,00% 30,00%

33.007,00€ 53.407,00€ 37,00% 3,00% 40,00%

53.407,00€ 120.000,00€

43,00% 4,00% 47,00%

120.000,00€

175.000,00€

44,00% 5,00% 49,00%

175.000,00€

300.000,00€

45,00% 6,00% 51,00%

300.000,00€

- 45,00% 7,00% 52,00%

INSURANCE:-Travel agencies should subscribe to an insurance against workers´ invalidity or death insurance of 27.000 €

-Every businessmen running a company must deposit in the Department of National Insurance account:29% of the worker´s salary as employer´s contribution and deduct a 6,25% of the employee´s salary as worker´s contribution.

RENT BY M2:

The best placement for our Travel Agency is Málaga city centre, the average price is 18 €/m2 .Premises with electrical system, sanitation facilities, and telephone.

ADVERTISING:Web pages and advertising.

Type of advert(Banner)

Load Place Cost by one thousand printings(CPM)(*)

Measure 728 x 90 25 k Horizontal- Heading or central

25 Euros

Measure 728 x 90 15 k Horizontal- Heading or central

15 Euros

Measure 234 x 60 10 k Horizontal- Heading or central

10 Euros

Measure 120 x 600 25 k Vertical- Right side 20 Euros

Measure 120 x 240 15 k Vertical- Side 15 Euros

Measure 250 x 250 15 k Square into central part 20 Euros

Measure 180 x 150 10 k Rectangle into central part 10 Euros

5-WORKERS RIGHTS (HIRE AND FIRE)

This company will hire a worker who is suitable for the job as described in the contract. The employee will be offered an indefinite contract to promote employment and to allow us apply for subsidies to pay the National Insurance contributions.

In case of a worker´s dismissal the company must pay the worker 20 days’ pay for each working year calculated proportionally with respect to those who have been employed for less than a year.

END.

By: Alvaro Hernández, Manuel Núñez y Sandra Cortés.