Payroll Services in Spain

For an indefinite full-time contract in 2026 the employer pays 23.60% for contingencias comunes, 5.50% for unemployment, 0.20% to FOGASA, 0.60% for professional training and 0.75% for the MEI – 30.65% before occupational risk. On top sits the AT y EP premium, set by activity: 1.50% for purely office work, around 6.70% for construction, up to 7.15% at the top of the tariff. An office role on an indefinite contract therefore costs about 32.15% of gross salary. A fixed-term contract pays 6.70% for unemployment instead of 5.50%, taking it to roughly 33.35%. The employee pays 6.50%.

Contributions are calculated on a base capped at €5,101.20 per month – up from €4,909.50 in 2025, a 3.9% rise made up of the 2.7% pension revalorisation plus the fixed 1.2 percentage points the 2023 pension reform adds every year to 2050. Above the cap the solidarity contribution applies instead, in three bands: 1.15% total on earnings to 10% above the cap, 1.25% to 50% above it, and 1.46% beyond – of which the employer pays 0.96%, 1.04% and 1.22%. Those bands rise every year to 2045, when they reach 5.50%, 6.00% and 7.00%. The MEI follows the same pattern, from 0.90% in 2026 to 1.20% in 2029.

The change that caught employers out in 2026 was the new AT y EP tariff, rebased from CNAE-2009 to CNAE-2025 and moved into disposición adicional 61ª of the LGSS. Employers that had not notified their CNAE-2025 code to the Tesorería General before 1 January 2026 were automatically assigned the highest rate among their possible codes – and a later notification takes effect only from the following month, with no retroactive correction. If your Spanish entity has never been asked for its CNAE-2025 code, that is worth checking this week.

A convenio colectivo de eficacia general binds every employer and every worker inside its functional and territorial scope. You do not sign it, join it or opt into it – it applies because of what your business does and where it does it. In 2026 there are more than 2,700 agreements with economic effects, covering over 8.6 million workers, and the average agreed increase for the year is around 3%. Sectoral agreements prevail over company agreements on pay in subcontracting, and ultraactividad means an expired agreement survives while it is renegotiated.

What the convenio sets is most of what a payroll actually costs: minimum pay tables by professional group, almost always well above the statutory minimum wage; annual hours, frequently below the 40-hour statutory week; the number and timing of extra payments; seniority payments; shift, travel and tool allowances; the sick-pay top-up; and often notice and severance terms better than the Estatuto de los Trabajadores.

Applying the wrong one is expensive and there is no good-faith defence, because the applicable agreement is determined objectively by activity rather than by the employer’s choice. Salary shortfalls can be claimed for a year per employee with 10% annual interest, contribution bases are regularised up to four years back with surcharges and interest, and the Inspección de Trabajo can fine €751 to €7,500 – commonly treating each affected employee as a separate infraction. Every downstream figure moves too: extra payments, holiday pay, sick-pay top-up and severance are all calculated off the convenio rate.

Income tax withholding is progressive and personal. The state scale for 2026 is unchanged – 19% to €12,450, then 24%, 30%, 37%, 45% and 47% above €300,000, as used in the AEAT withholding algorithm. But each autonomous community sets its own half of the scale, so the same salary produces a different net in Madrid and in Valencia, and the Basque provinces of Álava, Bizkaia and Gipuzkoa and the Comunidad Foral de Navarra run entirely separate tax systems under their own economic agreements, with their own scales, their own forms and their own deadlines.

Withholding is set from each employee’s Modelo 145 declaration of personal and family circumstances, remitted on Modelo 111 – quarterly by the 20th of April, July, October and January, or monthly for large companies with prior-year turnover above €6,010,121.04 – and reconciled annually on Modelo 190 in January. Non-residents without a permanent establishment go on Modelo 216 and 296. For 2026 a new deduction of €590.89 keeps employees on the minimum wage out of income tax altogether, tapering away by about €20,000.

For inbound hires there is the régimen especial de trabajadores desplazados – the Beckham Law. It taxes Spanish employment income at 24% up to €600,000 and 47% above it, for the year of relocation plus the following five, provided the employee was not resident in Spain in the previous five tax years. Since the 2022 startups law it also covers remote workers for foreign employers, company directors, qualifying entrepreneurs and highly qualified professionals, and extends to a spouse and children under 25. It is elected on Modelo 149 and declared on Modelo 151 – and it is a genuine recruitment argument for senior international hires, so it is worth knowing before you make the offer, not after.

The minimum wage for 2026 is €1,221 per month across 14 payments – €17,094 a year – set by Real Decreto 126/2026 and applied retroactively from 1 January. It is a floor that almost no convenio sits on. Holiday is a minimum of 30 calendar days a year, cannot be replaced by payment except on termination, and the employee must know their dates at least two months in advance.

Birth and childcare leave was extended to 19 weeks per parent by Real Decreto-ley 9/2025: six mandatory weeks immediately after the birth, eleven flexible weeks until the child is twelve months, and two paid weeks carved out of the eight-week parental leave, usable until the child is eight. Single-parent families get 32 weeks. It is an individual, non-transferable right per parent, paid at 100% of the base reguladora by the INSS – so no salary from you, but your employer contributions continue. The remaining six weeks of parental leave are unpaid unless the convenio improves them, which is a distinction a great deal of commentary gets wrong.

Then there is the list of paid leaves in article 37.3 of the Estatuto: fifteen calendar days for marriage or registered partnership, five days for the serious illness, hospitalisation or home-rest surgery of a relative to the second degree or a cohabitant needing care, two days for a death and four where travel is required, one day for moving house, an hour a day of nursing leave until the child is nine months, and up to four days where a civil-protection or severe-weather instruction prevents the employee reaching work. Each one is paid, each one has to be recorded, and several were added or extended in the last three years.

There are three routes and the cost of each is fixed by statute. A despido objetivo – economic, technical, organisational or production grounds, ineptitude or failure to adapt – pays 20 days’ salary per year of service, capped at 12 months, with 15 days’ notice, a written letter stating the cause and the compensation available at the same time. A despido improcedente, meaning one a court finds unjustified, pays 33 days per year capped at 24 months for service after 12 February 2012, and 45 days per year for service before it, with a combined ceiling of 42 months. A despido disciplinario that is upheld pays nothing. A dismissal found null means reinstatement, back pay and possible damages.

Where a dismissal is unfair it is the employer who chooses between paying compensation and reinstating – except for employee representatives, where the employee chooses. Defects in the letter or the process make an otherwise sound dismissal unfair, which is why the paperwork matters more in Spain than the reasoning. The employee has 20 working days to file.

One point to watch. In 2024 the European Committee of Social Rights found that Spain’s capped, tariff-based unfair-dismissal compensation breaches article 24 of the European Social Charter, and the Committee of Ministers has repeated the call for reform. No legislation has followed, and in July 2025 the Tribunal Supremo held that article 24 is not directly applicable, closing off court-awarded top-ups above the statutory tariff. So the numbers above are the numbers – but this is live, and any budget for a multi-year Spanish workforce should assume the tariff may be revisited.

Every exit also needs a finiquito: outstanding salary to the leaving date, the pro rata share of both extra payments, accrued untaken holiday, and any notice or end-of-contract indemnity. Signing it does not waive the employee’s right to claim if they mark it “no conforme”.