Employer of Record Services for Spain

Employing in Spain

The vibrant country of Spain remains a highly popular choice amongst our client base. But before hiring and setting up a business, it’s important to know that Spain is highly regulated with the main priority of protecting an employee’s interests.

Jobs are categorised according to differing regulations and collective agreements (known as “convenio colectivo”) and labour inspections are not uncommon. Generally speaking, Spain is not a particularly litigious country — except when it comes to employment matters and employee protection. The courts often favour the employee, so following strict procedures is essential if you want to employ individuals in Spain.

Let’s take a look at some of the key things you need to consider to stay on the right side of Spanish law.

Our Expertise

Managing a global workforce in Spain

Managing a workforce in Spain involves understanding and adhering to its diverse and comprehensive employment laws. Businesses must comply with the Workers' Statute, ensure appropriate social security contributions, and adhere to collective agreements that often vary by sector. TopSource Worldwide provides expert services to navigate these complexities, ensuring businesses remain compliant with Spanish labour laws.

Extensive expertise

Our team of experienced, knowledgeable staff collectively provide up-to-date employment information across 180 countries, so you can always get accurate advice.

Entity-free employment

Feel free to hire employees from all over the world without being weighed down by setting up entities, running complex payroll or recruiting a hiring team.

Payroll without hassle

Have the confidence that your staff will always be paid accurately and on time, so that you can focus on your core business activities and work towards your success.

Always-on support

Access helpful, relevant, personalised advice whenever you need it, along with expert-led recruitment policies and tried-and-tested HR best practices.

"With TopSource we were able to have employees hired or maintained in Nutreco without having to establish an entity in these countries for only 1-2 employees. I think most countries are covered by TopSource, so they can help us with almost all cases. Good advice on conditions and direct contact with employees. Invoicing done directly to the company. An easy process compared to hiring employees by ourselves."

Annette van Duijnhoven

Nutreco

See our customer stories

”We searched the market for a local payroll vendor in 2014 and we chose TopSource as our partner. We were looking for error-free and timely payroll processing and TopSource Worldwide delivers this, saving us time and money. We have worked together for 8 years now and would recommend them to anyone."

Praveen Lihinar

Sungard

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”TopSource Worldwide has a detailed and methodical onboarding process that made it easy for us to get set up and running with our UK employees. They were able to take the worry out of trying to comply with all local laws and regulations. Because they have this knowledge we do not have to research on our own and hope we are in compliance. This has saved us hours of time and gives both the company and employees a sense of security."

Supervisor

Client based in Ft Worth, Texas, USA

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GLOBAL EXPANSION STRATEGY

Personalised Employer of Record services in Spain

TopSource Worldwide offers personalised Employer of Record (EOR) services tailored to meet the specific needs of your business in Spain. This includes handling employee onboarding, payroll processing, tax compliance, employee benefits management, and HR support. Our EOR services ensure that your business meets all legal and regulatory requirements, providing a hassle-free solution to manage your Spanish-based employees.

End-to-end Spain payroll services

Looking to expand into Spain? Our unparalleled expertise in global payroll services ensures that your business can seamlessly navigate the complexities of payroll on a global scale, supporting your Spain expansion initiatives.

Global entity management

Venturing into the Spanish market can be both exciting and challenging. With distinct business regulations, cultural nuances, and economic landscapes, it's essential to have a clear roadmap for your business establishment journey.

Accounting

Whether your goal is to process your purchase-to-pay transactions with minimum errors or manage your expense claim procedure, our team of experts can handle your accounting responsibilities, allowing you to focus on your core business and save time and money.

Global EOR services

Managing a diverse global workforce can be complex. This is where TopSource steps in as an invaluable employer of record services partner for companies seeking to expand their global reach while ensuring compliance with local employment laws and regulations.

Global Expansion Simplified

How to do business in Spain

Entering the Spanish market presents a mix of excitement and challenges. Given unique business regulations, cultural intricacies, and economic dynamics, a well-defined roadmap is crucial for a successful business establishment.

TopSource Worldwide is with you at every stage. Whether it's navigating local regulations or facilitating seamless operational transitions, our expertise ensures a swift and efficient process for establishing your business in Spain.

Start your Spain expansion

Spain Insights

Key insights into Spain's landscape

VAT rates: Spain has a standard VAT rate of 21%, a reduced rate of 10% and a super reduced rate of 4%.

Ease of Doing Business rank: The Ease of Doing Business ranking can change annually. As of 2021, Spain ranked 30th out of 190 economies.

Consumer Confidence Index: As of 2022, Spain's Consumer Confidence Index was approximately 92.3, reflecting stable economic sentiment.

Employee maternity/paternity leave: Maternity leave is typically 16 weeks, and paternity leave is usually 4 weeks. In certain circumstances, additional weeks may be added.

Employee termination period: The notice period for terminating an employment contract in Spain depends on various factors, including the type of contract and the length of service. It can range from 15 days to several months.

Employee salary pay date: Payroll schedules can vary by company. In Spain, it's common for employees to be paid either monthly or semi-monthly.

Bank holidays: Spain has several national and regional holidays. Some of the national holidays include New Year's Day, Good Friday, Labor Day (May 1st), National Day (October 12th), and Christmas Day.

Statutory Provisions

Salary Payments

In Spain, month 13 and month 14 payments are often cited. These can either be paid as two additional payments in July and December or the employer can choose to make the payments in 12 prorated parts. Here at TopSource Worldwide, payments are made in 12 prorated parts.

Working Hours

It’s customary for employees in Spain to work a 40-hour working week.

Sickness

In the event of short-term sickness in Spain, employees are entitled to continuation of salary payments as follows:

First three days of sickness — no salary
4th day until 15th day — 60% of salary (met by the employer)
From the 16th day, the social security reimburses part of the salary to the employer (60% until the 20th day, 75% from day 21)

Long-term illness (classed as more than one month) will often be subject to the provisions of the applicable collective agreement, which will often determine that the employee must receive their full salary. In the event these provisions dictate that the social security will meet a portion of the salary, the employer would be expected to meet any shortfall.

Holidays

Annual holidays can be agreed individually or collectively, and their annual length may not be less than 30 days, including Saturdays and Sundays.

Public holidays in Spain comprise of a mixture of religious, national and regional or provincial observances. The following national holidays are celebrated:

Año Nuevo (New Year’s Day)
Epifanía del Señor (Epiphany)
Viernes Santo (Good Friday)
Fiesta del Trabajo (Labour Day)
Asunción (Assumption Day)
Fiesta Nacional de España (National Day)
Día de todos Los Santos (All Saint’s Day)
Día de la Constitución Española (Constitution Day)
La Inmaculada Concepción (Immaculate Conception Day)
Navidad (Christmas Day)

In addition to these national holidays, there are also various provincial holidays which employees enjoy depending on where they reside.

It’s also important to note that in Spain, it’s not possible to make deductions from an employee’s salary (only in the event of unauthorised absence). This means employees can’t take unpaid leave or to “purchase” additional holidays (although the employee can, of course, be granted additional holiday).

Other Statutory Provisions

Employees are entitled to 15 days off for marriage and 16 uninterrupted weeks off for maternity, adoption or foster care (plus an additional two weeks for each child after the second for a multiple birth, adoption or foster care).

The father can take off part of this time if both parents work. Therefore, on the birth of a child, adoption or the start of foster care, the father is entitled to suspend his contract for thirteen uninterrupted days of paternity leave, which may be extended by an additional two days for each child after the second for the birth, adoption or foster care of several children.

Overtime

Employees should not work overtime in Spain unless there is a specific reason for it, such as covering short-term sickness or emergency non-business-as-usual activities. In any event, this overtime should not exceed 80 hours per year.

Employees should seek written permission from the workside employer (client) prior to undertaking any overtime. If the employee must carry out overtime, they should receive time off in lieu (TOIL). If it is not practical for the employee to receive TOIL, then they can be paid for the overtime if it has been agreed in writing.

Employers Costs

As a guide, the following employer costs apply when employing individuals in Spain, subject to a monthly threshold of Euros 4,070.10 (2020):

Social security (Base d contizacion a la S. Soc) — 23.6%
Accidents — 2.6%
Unemployment insurance (Desempleo) — 5.5%
Insolvency (Fondo Garantia Salarial) — 0.2%
Training (Formacion Profesional) — 0.6%

Social Security System/Healthcare

In Spain, employees are insured under the Sistema Nacional de la Seguridad Social (National Social Security System) and they and their beneficiaries are entitled to healthcare.

The healthcare system in Spain is relatively good, with many public and private hospitals belonging to the social security system. The Spanish social security healthcare network is organised into primary care centres (called “health centres”), specialised care centres and hospitals. Treatment is free under the public social security system. If specialist treatment is required, the doctor will send the patient to a specialist with an official report.

All employees working in Spain should register with the social security system. Both employer and employee contributions are made monthly by the employer. This covers healthcare, unemployment insurance, industrial injuries, pension, invalidity and death. The minimum monthly base for social security contributions is EUR 1,050.00 and the maximum is EUR 4,070.10 (2021).

Mileage Allowance

Mileage can be reimbursed at 0,19 cents per km tax-free — anything more than this would be taxable. If mileage is claimed, it’s important that adequate records are maintained as the employer would have to provide satisfactory evidence of proof of business mileage if the employee became subject to an inspection in the future.

Termination

Employment in Spain is highly regulated with employee’s enjoying enhanced legal protection. This can make terminating contracts in Spain notoriously difficult. As a guide, you can budget for the termination of an employee in Spain as a severance fee, which would be due in the event of wrongful termination. This equates to 33 days of salary per employment year (one month of salary for every year worked with the company) which is in addition to any contractual notice period.

The calculation base for the fee is based on the total gross income over the last 12 months, meaning it includes any additional income such as bonus and commissions. If a company wishes to terminate, they should also expect to pay at least one additional month in lieu of notice, over and above the severance fee.

It’s worth noting that if an employee believes they have been terminated unfairly, they may lodge a case against their termination in a Spanish labour court. This process is convoluted and costly. However, if the company engages an Employer of Record, the responsibility for assessing the legal basis and issuing appropriate legal documentation for a potential termination rests with the EOR. It’s imperative that the workside employer (client) consults the EOR prior to any individual discussions taking place around possible termination of contracts.

Employ and pay anywhere

Specialising in multi-country payroll solutions

TopSource Worldwide offers comprehensive payroll outsourcing services, ensuring seamless and accurate management of your organisation's payroll functions. With cutting-edge technology and a team of experienced professionals, we handle payroll processing, tax compliance, and regulatory requirements with precision.

Discover our payroll benefits

Calculate Your Employer of Record Taxes in Seconds

Employment Cost Calculator in Spain

Our Employment Cost Calculator simplifies complex tax calculations for global businesses. Accurately assess tax obligations, ensuring compliance with local regulations. Streamline payroll management effortlessly with our user-friendly tool, providing transparency and efficiency in international workforce taxation.

In addition to calculating your EOR taxes, our calculator can also help you:

Understand the different types of EOR taxes
Stay up-to-date on the latest changes to EOR tax regulations
Avoid penalties for non-compliance

Speak to our team

Our author

Mark Robbins

Global Sales Director

Mark is the Sales Director at Topsource Worldwide. He has been a pioneering figure in the global expansion space since 2013. He is the first salesperson to sell EOR services in Europe, a feat he accomplished in 2013.

Published 2023-11-14 00:00:00

Updated 2023-11-15 00:00:00

Reviewed by:

Adrian Cooney

Fact checked by:

Adrian Cooney

Employer of Record FAQ

Frequently Asked Questions about Spanish employment solutions

What is an Employer of Record in Spain?

An Employer of Record (EOR) is a professional services provider that assumes the responsibility of being the legal employer for a company's workforce in Spain. This entails managing tasks such as payroll processing, tax withholding, benefits administration, and ensuring compliance with local labour laws and regulations.

How do global employment services work?

Global employment services operate as a comprehensive solution for businesses seeking to expand their workforce across borders. These services, often provided by Employer of Record (EOR) companies like TopSource Worldwide, streamline the complexities of international employment.

What are the benefits of working with an Employer of Record in Spain?

Employer of Record companies assume the legal responsibilities associated with employment, alleviating the burden of compliance, payroll, and HR management in Spain. This allows companies to expand globally without the complexities of establishing legal entities in each location.

What is the difference between EOR & PEO?

An EOR acts as the legal employer, handling tasks like payroll, tax compliance, and benefits administration. This allows companies to expand internationally without establishing legal entities. On the other hand, a PEO shares employer responsibilities with the client company, often co-employing workers.

How are employer payroll taxes calculated in Spain

Calculating employer payroll taxes involves understanding the various taxes associated with employing workers and complying with tax regulations in Spain. Key components include federal and state income taxes, Social Security, Medicare, and unemployment taxes.

What global employment solutions does TopSource offer?

TopSource Worldwide facilitates hassle-free global expansion by acting as the legal employer, handling payroll, tax obligations, and HR responsibilities. With expertise in global entity management, TopSource assists businesses in navigating the intricacies of legal structures across borders.