From its strategic location as a gateway to Europe and Africa to its robust infrastructure and skilled workforce, Spain is an ideal destination for your global expansion. Here’s what you need to know about payroll and HR in Spain to thrive in its dynamic market.
Monthly plus two additional payments in July and December
Spanish and Catalan
1st January – 31st December
36.85%, employer pays 30.4% and employee pays 6.45%
As a foreign company, you could set up payroll in Spain as a Foreign Non-Resident Employment Structure (FNRE) and bring on a very small staff team. If you plan to engage in commercial activities in Spain, however, a full payroll set-up is advisable.
The Spanish government adjusts the minimum wage each year based on a variety of factors, including national productivity and employment levels. The Ministry of Employment and Social Security sets the minimum wage in Spain at daily, monthly, and annual levels.
Since June 2023, the national minimum wage in Spain remained fixed at €1,260 per month totalling €15,120 per year. In other words, you should receive an hourly wage of €8.45.
In cases of illness/personal injury, the employee is entitled to temporary disability benefit for sick pay, receiving at least 60% of their regular salary. Let’s get into the specifics: (put below in table)
1-3 days (3 days) = 0% (no obligation to pay unless the employer agrees to make payment, or it is stated in the CBA)
4-15 days (12 days) = 60% (60% of the employee contributions base paid by the employer)
16-20 days (5 days) = 60% paid by Social Security (60% of the employee contributions base paid by social security even if the employer makes the payment on behalf of the social security)
21+ days = 75% paid by Social Security (75% of the employee contributions base paid by social security even if the employer makes the payment on behalf of the social security).
Additionally, all sick pay musty be processed in payroll in the month it was incurred.
The maternity pay is managed and paid by the Social Security System Health Insurance Fund. The social security benefits are paid to employees on maternity leave calculated as monthly benefit equal to 100% of the mother’s base rate. All pregnant women are entitled to healthcare before, during and after birth, and need to visit the healthcare centre with their Sistema Nacional de Salud (National Health Service) user’s card to receive them.
Low-income families benefit from childcare up to €100 monthly for children under 3 years old, €70 between 3 and 6 years old, and €50 between 6 and 18.
In Spain, fathers have the right to benefit from paternity leave too. They’re entitled to 16 weeks of paid paternity leave with 100% base salary. But, they must take the first 6 weeks of leave immediately after delivery.
The Spanish income tax is made up of two parts, a national tax and a regional tax. Typically, each figure is the same, however there may be regional variations.
However, you should always check with the local Comunidades Automas before making any assumption about the regional rate.
If you are a Spanish resident, you will be taxed on your worldwide income from your savings regardless of where the savings are based. Your savings income includes any income from:
These Spanish tax rates on savings income are as follows from 2021:
As of 2023, the social security rate in Spain is 36.85%. The employer pays 30.4% of the employee’s wage, and the employee pays the remaining 6.45%. The minimum amount to be contributed from your salary changes depends on your salary, but the maximum contribution for 2023 per employee is 4,495.50 per month.
As self-employed, you must contribute to social security if you earn at least the minimum wage. As of 2023, the minimum annual salary is 15,120 in Spain.
Unlike employed individuals, freelancers must pay the total amount themselves. The amount you contribute monthly is calculated by multiplying 30.6% by the minimum base amount you want to contribute. The social security contribution in 2023 ranges from 230 and 500 euros.
But, thanks to the new autonomo law, freelancers receive some discounts. You’ll pay a discounted flat rate: the first year 80, the second year is also 80 only if you are making less than minimum wage (SMI) of 1,166 per month. Additionally, if you’re a freelancer younger than 30, you receive an additional 30% discount for another year.
Below shows what new monthly social security contributions look like in Spain from 2023-2025.
Monthly Income €
670 – 900
900 – 1,166.70
1,166.70 – 1,300
1,300 – 1,500
1,500 – 1,700
1,700 – 1,850
1,850 – 2,030
2,030 – 2,330
2,330 – 2,760
2,760 – 3,190
3,190 – 3,620
3,620 – 4,050
4,050 – 6,000
By contributing to the Spanish social security system, you can access certain benefits. Including:
But, if you are a freelancer you don’t receive unemployment and work-related illness benefit.
Payroll data management and storage in Spain is subject to various legal and regulatory requirements. The specific processes and systems used may vary from one organisation to another, but there are common practices and regulations that apply across the county.
Spanish employers are required to collect and maintain certain employee information, including personal and employment-related data. This includes names, addresses, identification numbers (e.g., DNI/NIE), bank account details, salary information. Typically, this data is collected when an employee is hired and updated as necessary throughout employment.
In Spain, employees need to submit periodic tax and social security contribution reports to the Spanish tax authorities, as well as the Spanish Social Security. The specific requirements and forms for reporting can change and may vary based on the region and specific circumstances. Common forms of reporting payroll information in Spain include:
It’s essential to stay up to date with the specific requirements and forms for payroll reporting in Spain, as they can change over time.
In Spain, auto-enrolment in private pension plans is part of the broader pension system designed to encourage participation in private pension schemes. Here’s how auto-pension enrolment works in Spain:
Probation periods: Probation or trial periods are set within collective agreement. However, widespread practice in Spain dictates a probationary period of two months, extending to six months for graduate technicians and senior employees.
Employees from an EU member nation will not need a work permit or Visa to work in Spain. Anybody else will need to apply for a short-term or long-term Working Visa. The Spanish embassy can help with this.
Typically, Visas to work in Spain are awarded to highly skilled employees in industries that are considered to have a shortage occupation. This Visa can take up to 8 months to be approved. Proof that an equally qualified EU national is unavailable will be required.
A termination is treated as being by reason of redundancy if it is based on an “economic, technical, organisational or production” reason. If you are on an indefinite work contract and have been dismissed for objective reasons, you are entitled to a redundancy payment based on 20 days per year worked, or pro rata for any months over or under that. The maximum redundancy amount is 12 months wages. In the event of a fair dismissal, legislation requires that employees are paid a minimum legal compensation of 20 days’ pay for each year of service, up to maximum of 12 months’ pay.
The Termination process varies according to the Employment Agreement and Collective Agreement in place and is based on the type of contract and reason for termination.
Notice Period: The notice period in Spain is set at 15 days and if notice isn’t given, employers can give payment in lieu.
In Spain, statutory leave, and employee time off is regulated by a combination of labour laws, collective bargaining agreements, and government regulations. Some of the key types of statutory leave and time off in Spain include:
Full-time employees in Spain are entitled to a minimum of 22 working days, equivalent to 30 calendar days of paid annual leave per year. This is one of the most generous holiday entitlements in the world. The leave is usually taken during the summer months and is often divided into two periods.
Part time workers:
It’s important to note that Spanish labour laws and employment regulations can change over time, so it’s essential for both employers and employees to stay updated with the latest legal requirements and collective agreements in their specific region and industry.
Spain has several national and regional holidays, but the exact number of public holidays can vary by region. In general, employees are entitled to paid leave on these dates.
Public holidays in Spain can vary by region and are determined by both national and regional authorities. Here is a list of all the public holidays in Spain:
New Year Holiday
Andalusia, Aragon, Asturias, Castile and Leon & Murcia
Andalusia Regional Holiday
Baleric Islands Regional Holiday
Melilla Statue of Autonomy
St Joseph’s Day
Madrid & Murcia
National except Catalonia & Valencia
Baleric Islands, Basque Country, Catalonia, La Rioja, Navarre & Valencia
Aragon Regional Holiday
Madrid Regional Holiday
Galican Literature Day
Canary Islands Regional Holiday
Castile-La Mancha Regional Holiday
La Rioja Regional Holiday
Murcia Regional Holiday
St John’s Day
Catalonia & Valencia
Ceuta & Melilla
National Day of Galicia
Saint James’ Day
Basque Country, Castile and Leon & Navarre
Day of the Institutions
Our Lady of Africa
Assumption of Mary
Day of Ceuta
Asturias Regional Holiday
Extremadura Regional Holiday
Our Lady Victories
National Day of Catalonoia
Cantabria Regional Holiday
Valencian Regional Holiday
Fiesta Nacional de Espana
All Saints’ Day
Virgin of Almudea
San Francisco Javier
St Stephens Day
Employees are entitled to paid leave to attend a family member’s funeral. The duration of this leave may vary based on the specific circumstances of the relationship.
Employees may be entitled to special leave for personal reasons, such as relocation, caring for a sick family member, or other urgent situations. The specific terms and duration of the leave may vary.
Trade union representatives are entitled to leave for union activities and negotiations, as established in the collective bargaining agreements.
A pregnant employee is entitled to 16 weeks of paid maternity leave when there is a newborn, with the potential to increase depending on certain circumstances. For twins, the term rises to 18 weeks, this rises to 20 weeks for triplets. There is also an additional two-week period for children with disabilities.
The 16 weeks of maternity leave consists of two periods:
Compulsory leave for the first 6 weeks after birth.
Remaining leave for the additional 10 weeks of a full absence or 20 weeks of half-day absences, which may be taken anytime up to one year later (with at least 15 days’ notice).
Anyone contributing to the social security system benefits from paid maternity/paternity leave and child benefits. Maternity benefits include medical, prenatal, and postnatal care for pregnant women. Mothers also receive 100% of statutory base pay for 16 weeks of pregnancy leave. In addition, the benefit includes 2 daily paid half-hour breaks for mothers who breastfeed for express milk.
Also known as ‘permiso de paternidad’ provides fathers with certain rights and benefits when it comes to taking time off from work after the birth or adoption of a child. Here are some key points regarding Spanish paternity leave:
Setting up a legal entity in Spain can be a complex process, depending on the type of business you want to establish. Here are the common legal entity options in Spain and the steps to set them up:
This is the simplest form of business ownership. You operate the business as an individual and there’s no legal distinction between your personal and business assets. To achieve this, you need to register with the local tax authority and obtain a tax identification number (NIF).
This is a popular choice for small to medium-sized businesses and requires at least one shareholder (can be outside of the Country) and a minimum share capital of €3,000.
The steps to complete this include: Registering the company’s name with the Central Commercial Registry, draft the company’s articles of association and deed of incorporation and have them notarised. Then you must apply for a tax identification number (NIF) for the company and register the company with the Tax Office and Social Security.
This is suitable for large businesses and requires at least one shareholder and a minimum capital of €60,000. The steps to set this up are similar to an S.L, but a higher minimum capital is needed.
If you have a foreign company and want to establish a presence in Spain, you can set up a branch or subsidiary. Then, register the branch or subsidiary with the commercial registry tax office and appoint a legal representative and provide financial statements from the parent company.
Suitable for businesses with a cooperative structure but you must register the cooperative with the Central Cooperative Registry, draft and notarise the cooperatives bylaws and obtain a tax identification number (NIF) for the cooperative.
It will take roughly 12 weeks for an entity to be ready to start trading in Spain. You may be able to reduce this to 8-10 weeks, but that takes a great deal of good fortune and no complications.
The RMC is the Spanish equivalent of Companies House. This is the central register that grants permission to companies to use a trading name in Spain and holds all relevant information pertaining to a business. You will need to provide four possible names for your business to RMC before permission to trade will be granted.
The FNRE policy allows you to employee Spanish nationals, in Spain, without establishing a legal business entity in the country. It typically only takes around 5 weeks to set up and there is little administration involved. Your options for commercial activities will be seriously limited, though.
Estatuto de los Trabajadores (aka ET) translates as, “Status of Workers”. This is a document that lists out the rights and protections afforded to employees in Spain. Convenios Colectivos, meanwhile, means, “Collective Agreements.” This is the contract agreed between an employer and employee or trade union.
No, Spanish employees outside their probationary period have very strict protections against termination under the Estatuto de los Trabajadores. Unless dismissed for gross misconduct, an employee is entitled to a minimum of 30 days of written notice of termination of employment, along with an explanation for your decision
Termination of a contract may very well end up being protested in court. With this in mind, it is worth consulting a legal representative before making moves to terminate an employee’s contract in Spain. The law typically favours employees, so you will need a strong case for dismissal.
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