Employer Of Record in Spain

We make it easy and painless to expand your business into Spain. Forget about dealing with local regulations, confusing tax laws and international payroll management. We take care of all that so you don't have to.

Accelerate your growth into Spain Compliantly and hassle-free

At Serviap Global we handle all employee onboarding, payroll, compliance, risk, mitigation and benefits, so you can focus on what matters most – your business.

How we can help you expand in Spain

As your EOR in Spain we’d help you expand by hiring employees and running their payroll without establishing a local branch office or subsidiary. 

Your candidate is hired by a PEO in Spain provider in accordance with local labor laws and can be onboarded in days instead of the months it typically takes. Shortly after, your new employee will be working for you, just like any other member of your team. 

Expand to Spain with Serviap Global

Through our PEO and EOR services, you can hire qualified talent in your industry without the trouble of opening your own legal entity. 

In just a few days, you can easily and safely build a presence in Spain being sure that your staff will be hired in compliance with labor and tax regulations.

Table of Contents

Quick Facts

Currency:
Euro (EUR)

Capital:
Madrid

Payroll Cycle:
Monthly

Language(s):
Spanish

Spain Country Facts

Spain has a history of being a trade route between north Africa and the rest of Europe and the country’s capital city is Madrid. The prime minister is the president of the government of Spain, but the prime minister recognizes the King or the Queen of Spain as the honorary monarch who represents the chief of state. The main language spoken in Spain is Spanish, but other languages such as Portuguese, Basque, Catalan, and Occitan are also spoken.

Small to mid-size businesses tend to be family owned while bigger businesses seem to follow more global trends. For Spaniards, family relationships and human interactions are more important than professional status and degree. Spaniards value deep relationships and those relationships are developed over time. The speed of business goes at the speed of relationships, which is typically slower than what people will experience in the United States of America.

The Economy

Spain has the 14th largest GDP in the world and the 5th largest in Europe. It is a member of the European Union and the World Trade Organization. Spain has benefited from large exports and low imports at the international trade level in fact exports account for about 33% of the country’s GDP. Private banks have been an important component of Spanish economic stability; they tend to be conservative in their practice rules and to collaborate with the government bank of Spain. Spain is the second biggest investor in Latin America and enjoys first class infrastructures.

Small and Medium Businesses

Small and medium size businesses account for about 63 % of total value added and about 72% of employment. The main industries for those businesses are retail and wholesale, personal services (beauty, household repair, etc.), healthcare, restaurants, entertainment and recreation, and real estate.

Starting a Business

Any person from any nationality may start a business in Spain, but European Union citizens can go through the process more quickly. Others will need to get a work permit to start a business which you can get at your country’s Spanish Embassy. Most people set up a limited liability company, but this can be time consuming. Keep in mind, the Spanish authorities demand a minimum financial requirement to establish a business, also, your personal assets and your business assets are counted as the same, which makes you personally liable. Once complete you will need to register your business name with The Mercantile Registry and open a business account in a Spanish bank with a minimum deposit of 3,000 euros. Finally, you will apply for the deed of incorporation at the Local Government Tax Authority.

Payroll

Minimum Wage1,050.00 EUR per month
PayrollEmployees are paid monthly.
13th & 14th Month PaymentThis is mandatory pay and is made in December and July.
WagesThe median salary is 30,000 euros per year
OvertimeSpanish workers can work 80 hours of overtime per year.

Leaves of Absence

Employees have the right to paid absences for the following things:

•       Vacation leave:

A full-time worker may take 22 working days (30 calendar days) of paid holiday time per year. One leave must be two weeks long, the rest can be divided up as needed.

•       Workers Compensation:

If an employee needs to leave due to an accident or injury at work,

Social Security pays 75% on the first missed day of work.

•       Sick Leave:

When an employee is sick, the company is under no obligation to compensate for the first to the third day. A sick leave longer than three days is picked up by the National Institute of Social Security which pays 60% of the employee’s salary for the first 20 days. It then changes to 75% for a maximum leave of 18 months.

•       Maternity Leave:

Permiso de Maternidad is the standard maternity leave in Spain that gives a woman 16 weeks leave. This extends by 13 weeks if the baby is premature and must be in the hospital for 7 days.

•       Paternity Leave:

Fathers receive 5 weeks of paid leave

Tax advantages

Spain requires employees and employers to contribute to social security at a rate of 30% for employers and between 4.8% to 6.4% for employees. The employer also holds back the employee’s income tax; the amount differs depending on the annual gross salary from 0% to about 33%.

Renewable Energy

Spain’s renewable energy (RE) accounts for 18% of its final energy consumption. Its electricity generated by RE is 42.8%; of that percentage, 19.1% comes from wind technology, 11.1% from hydraulic energy, 5.2% from solar power, and 2% from thermal energy. Spain is the world’s 4th largest producer of wind energy. Spain also enjoys a near constant abundance of sunshine and solar technology is developing rapidly.

Business Culture

Spain has a higher level of bureaucracy than the United States, so business is slower.

  • Build Relationships
    The business culture of Spain centers around personal relationships and family. Business people also like to slow the speed of business while maintaining a respected professional reputation. For them, a person’s personality may be more important than her credentials; this may also be true in the decision- making hierarchy of a business.
  • Unique Meeting Practices
    During meetings, Spaniards may interrupt the conversation and show a high level of energy, but they will seldom give direct criticism at the outset.
  • Greetings
    The standard greeting in the workplace is a handshake. Once people get to know each other well, they may hug as a greeting or a departure. When business people first meet, they often exchange business cards. The card should be in Spanish.

Food Culture

Spain enjoys a Mediterranean diet. Spaniards also love to eat meat. The most popular ones are lamb, pork, beef, and chicken. They also eat cured meats like the “Chorizo” sausage and the “Jamon Serrano” ham.

Since Spain enjoys long coastal areas, many enjoy different types of fish and sea foods.

In the north, many cook with lard and in the south with olive oils.

Olives are often used as appetizers. Spaniards also eat beans, lentils, rice, and potatoes.

One of their favorite dishes is called “Paella”, which is cooked with rice, meat, pepper, and spice.

Population

Spain is a country in the southwestern part of Europe. It has a population of 47.35 million and is the 6th most populated country in Europe. Native Spaniards constitute about 88% of the population. But in recent years, Spain has granted citizenship to many persons who came from Ecuador, Colombia, and Morocco. Spain has ties to Mexico and other Latin American countries due to its early colonization and immigration.

Geography

It is the fourth largest country by area in Europe and it holds territory in Europe and Africa. Spain is bordered by Portugal on the west side, by Gibraltar and Morocco on the south side, and has enclaves in Africa. Spain is also bordered by the Pyrenees mountains and the country of France on the northeast side. In fact the Portugal and Spain border is the longest uninterrupted border in Europe.

Spain also owns a series of islands, such as the Balearic Islands and the Canary Islands. There are many mountains, plains, and rivers and as such Spain enjoys a Mediterranean climate with warm and dry summers, oceanic climates on the coasts, and alpine climate in its high-altitude mountains

Madrid & Barcelona

These two cities were voted two of the best cities for start-ups in the entirety of Europe. These cities are especially attractive for business in the technology sector. Madrid is considered a cosmopolitan city and is the capital of Spain. There are plenty of events for those new to Spain to build connections. Whereas Barcelona is the second most populated city in the Iberian Peninsula, and has many major companies with high turnover rates.

General Highlights

Year2022
CountrySpain
CapitalMadrid

 

 

 

 

 

 

Num. States / Province

Spain has 17 autonomous regions which are divided into 50 provinces: La Coruña, Álava, Albacete, Alicante, Almería, Asturias, Ávila, Badajoz, Balearic Islands, Barcelona, Biscay, Burgos, Cáceres, Cádiz, Cantabria, Castellón, Ciudad Real, Córdoba, Cuenca, Guipúzcoa, Girona, Granada, Guadalajara, Huelva, Huesca, Jaén, La Rioja, Las Palmas, León, Lleida, Lugo, Madrid, Málaga, Murcia, Navarre, Ourense, Palencia, Pontevedra,

Salamanca, Santa Cruz de Tenerife, Segovia, Seville, Soria, Tarragona, Teruel, Toledo, Valencia, Valladolid, Zamora, Zaragoza

LanguageSpanish
Local CurrencyEuro
Major ReligionCatholicism
Date Formatdd/mm/yyyy
Thousands Separator Format999.999.999.99
Country Dial Code+34
Time ZoneGMT+1
Population47.35m
Border CountriesPortugal, and France.
Continental surface195,124 mi²
Fiscal YearJanuary 1st to December 31st
VAT %21% IVA certain goods and services are eligible for the reduced rate of 10%, 4% or 0%
Minimum Wage1,050.00 EUR per month

 

 

Taxpayer Identification Number Name in the country

The Tax Identification Number (NIF) for Spanish citizens is the number on the National Identification Document (DNI). For Non-Spanish citizens, it is the Foreigner Identification Number (NIE).
Current PresidentPedro Sánchez

What you need to know about employing personal in Spain:

Laws and Agencies that regulate labor relationships

The main employment laws in Spain are the Spanish Civil Code and the Spanish Workers’ Statute. Employment law in Spain is very comprehensive and protects many rights for employees both citizens and non-citizens.

LawsBrief Description
The ConstitutionThis is based on the indissoluble unity of the Spanish Nation and was signed in 1978 with amendments through 2011.

Organization membership

ADB (nonregional member), AfDB (nonregional member), Arctic Council (observer), Australia Group, BCIE, BIS, CAN (observer), CBSS (observer), CD, CE, CERN, EAPC, EBRD, ECB, EIB, EITI (implementing country), EMU, ESA, EU, FAO, FATF, IADB, IAEA, IBRD, ICAO, ICC (national committees), ICCt, ICRM, IDA, IEA, IFAD, IFC, IFRCS, IHO, ILO, IMF, IMO, IMSO, Interpol, IOC, IOM, IPU, ISO, ITSO, ITU, ITUC (NGOs), LAIA (observer), MIGA, NATO,

NEA, NSG, OAS (observer), OECD, OPCW, OSCE, Pacific Alliance (observer), Paris Club, PCA, PIF (partner), Schengen Convention, SELEC (observer), SICA (observer), UN, UNCTAD, UNESCO, UNHCR, UNIDO, UNIFIL, Union Latina, UNOCI, UNRWA, UNWTO, UPU, WCO, WHO, WIPO, WMO, WTO, ZC

Labor CodeNo one labor code
Social SecurityThis is called the seguridad social and the overall rate for it is high with contributions set to 28.3%. For most employees, their employer pays the majority of this cost.

Key Tax and Labor Authorities

Ministry of Finance or Ministry of Treasury (MH)

 

This sector of the government carries out policies on public finance.

Agencia Estatal de Administración Tributaria (AEAT)This agency is the revenue service of Spain and is responsible for the effective application of the national tax and customs system.
Customs Surveillance Service

 

This investigates and enforces any violation of taxes and more.

Labor Contracts

Article 8.1 of the WS

Contracts can be verbal or written unless specifically requested in writing

by one of the parties.

Article 8.2 of the WS

Some contracts must be in writing including:

•       Workers employed in Spain to work abroad for more than 4 weeks

•       Part-time contracts

•       Fixes-discontinuous contracts or relay contracts

Articles 14.1, 12.5 a and

21.4 of the WS & Article 8.5 of the WS and the RD

Probation periods, permanence agreements and complementary hours agreements must be set up in writing. As must the identity of the parties, commencement of employment, category, occupational group, salary, workday, holiday time and collective bargaining if it is being established or changed.

 

Trade Union Rights

Article 2.2. of the LOLS gives trade unions the right to draw up bylaws and regulations as well as other federations etc. Employees have the right to join a trade union. Employees must confer with trade unions regarding their workers, the company’s situation and similar.

 

Work Councils

In companies of 50 or more employees, work councils must be established. Work councils must monitor compliance with existing labor standards of health and safety conditions and the equality of principle and more. An employer’s decisions are not bound by the consent of third parties, but the work council can report certain things before the employer makes their decision.

Work Hours

A maximum of 8 hours a day and Spain is currently trialing 32 hours a week, or a 4 day work week.

Annual Taxable Income

There are two income taxes in Spain, Spanish personal income tax (PIT) for residents and Spanish non-residents’ income tax (NRIT), for non-residents who obtain income in Spain. There are two types of income that are taxed also, general taxable income and savings taxable income.

Saving taxable income is:

  • Dividends and other income generated from holding interests in companies.
  • Income generated from capitalisation transactions and life and disability income insurance.
  • Interest and other income generated from transferring the taxpayer’s own capital to third parties. As an exception, when capital transferred to a related company exceeds three times the latter’s equity, the interest corresponding to the excess is taxed as general taxable income.
  • Capital gains generated from transfers of assets.

And is taxed the following way:

Income in EuroTax in %
0-6,00019
6,000-50,00021
50,000-200,00023
2000,000 and above26

General taxable income is for:

Capital gains not generated from transfers of assets (such as lottery prizes). Income allocations, or imputations, or attributions, as established by law.

Interest and other income generated from transferring the taxpayer’s own capital to a related company (when it exceeds three times the latter’s equity and for the part corresponding to the excess).

And is taxed the following way:

Taxable Base in EuroTax liability in EuroExcess of Taxable Base in EuroTax rate in %
0012,45019
12,4502,365.507,75024
20,2004,225.5015,00030
35,2008,725.5024,80037
60,00017,901.50240,00045
300,200125,901.50Remainer47

Non-Resident income tax for non-resisdents who have income that is obtained via a permanent establishment (PE) is taxed the following way. A Permanent Establishment is when an entity or person has an operational unit or site via which it constantly and habitually performs an economic activity within a certain country.

DefinitionRate in %
General Rate24
Other EU or EEA residents with an effective exchange of tax information19
Capital Gains generated from transfers of assets19
Interest19
Interest for EU residents of countries with DTTsExempt or lower rates
Dividends19 (unless a DTT treaty exists)
Royalties24 (unless a DTT treat exists)
Pensions8-40

Corporate Tax Rates

According to statistics, in general it is considered that the corporate tax rate for 2022 will be 25%. Of course other rates may apply depending on the type of company.

Public Holidays

The Labor Code provides for public holidays that are observed in Ecuador:

DateHoliday Name
1 JanNew Year’s Day
6 JanEpiphany
15 AugFeast of Assumption
12 OctNational Day of Spain
1 NovAll Saints Day
6 DecConstitution Day
8 DecFeast of the Inmaculate Conception

Termination

Type of Termination

Brief Description

 

 

Fair Dismissal

A fair dismissal is when there is no protection for the employee. There is no consent needed from a third party for the employer to dismiss someone based on a fair dismissal. An employer cannot dismiss an employee without consulting a union if the worker is part of one. Committee members, staff delegates and RLT possess certain guarantees against dismissal according to Article 68 of the WS.

 

 

Unfair Dismissal

When a dismissal is considered unfair the employee is allowed protection. This protection consists of 33 days per year of service of compensation. Or the readmission of a worker with payment of lost wages.

A worker can pursue that their dismissal was unfair if they deem appropriate, in all cases a worker will be represented by an RLT whether the dismissal was fair or unfair. Settlements are possible

 

 

Reasons for Dismissal

Reasons an employee can be dismissed are laid out in Article 54 of the WS. Some are:

•       Voluntary decrease in work performance

•       Disobedience of indiscipline

•       Repeated unjustified absence from attendances or punctuality

 

 

Procedure

Employers must provide employees with a dismissal letter along with a document that outlines the amount due and a company certificate. If it is an objective dismissal the company must provide 20 days per year of service in compensation. If a collective dismissal is taking place the employer must follow Article 51 of the WS.

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