COUNTRY GUIDE
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.
EUR
+34
Monthly plus two additional payments in July and December
30
Madrid
CET
Spanish and Catalan
Jan 1st – Dec 31st
21%
25%
36.95%, employer pays 30.48% and employee pays 6.47%
19%
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.
Yes, you must open a Spanish-based business bank account to make payments to employees and other authorities and receive payments from your salary, pension, or holdings from the UK and abroad.
A Spanish bank account is also needed to pay taxes, but don’t worry, Cintra Global’s local provider if the client doesn’t have one, if they set up a company then their own bank will be needed.
The standard working week is expected to decrease from 40 hours to 37.5 hours, without a reduction in pay. While it’s not yet in place, the change is expected to happen late in 2025.
Any hours worked beyond this limit will be classed as overtime, and the reduction should not result in salary cuts.
The maximum number of working hours per week is 48, and any hours worked above this must be paid as overtime. Employees in Spain are permitted to work a maximum of 80 hours of overtime per year but in certain industries and situations, there are exceptions to this rule.
You might have heard of the famous Spanish siestas. Well, the typical workday for Spaniards working in retail and other shops is a ‘split shift’, lasting from 9am-8pm with a two-hour lunch break. However, in an office job you will find similar working hours as in other countries with 30-60-minute lunch breaks.
The labour cost index in Spain was 5.7% year-on-year in June.
Expect to pay around 1.6 times an employee’s annual salary to get them onto your payroll in Spain. This is due to high social security taxes on employers. Always consider this tax when making an offer of employment to keep salaries affordable.
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.
The national minimum wage (SMI) in Spain for 2025 is €1,184 per month, distributed over 14 payments annually.
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.
In Spain, income tax rates are progressive and are made up of both state and regional contributions. The combined rates can vary depending on the community, but the below is a general overview of the national income tax brackets and rates for 2025, using Madrid as an example for the regional rate:
Income | State tax rate | Regional rate | Total |
€0 – 12,450 | 9.5% | 9.5% | 19% |
€12,450 – 20,200 | 12% | 12% | 24% |
€20,200 – 35,200 | 15% | 15% | 30% |
€35,200 – 60,000 | 18.5% | 18.5% | 37% |
€60,000 – 300,000 | 22.5% | 22.5% | 45% |
Over €300,000 | 24.5% | 24.5% | 49% |
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:
Social security contribution rates
Total contribution rate: 36.83%.
Employer contribution: 30.48% of the employee’s wage.
Employee contribution: 6.35% of their wage.
2. Contribution bases
Maximum contribution base: Increased to €4,909.50 per month in 2025.
Minimum contribution base: Adjusted in line with the increase in the Salario Mínimo Interprofesional (SMI), plus an additional one-sixth.
3. New “solidarity contribution”
Effective January 1, 2025, Spain has introduced a “solidarity contribution” targeting annual salaries exceeding the maximum contribution base (approximately €58,908 per year). Applied annually until 2045 when final percentages are reached, the contribution applies progressively to:
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.
Employers in Spain and legally obligated to ensure the security and confidentiality of payroll data. This includes implementing data protection measures to prevent unauthorised access and data breaches.
Spain, like other EU countries, follows the General Data Protection Regulation (GDPR). This means that personal data, including payroll data, must be handled in compliance with GDPR requirements. Employers must obtain consent for data processing, notify employees of data usage, and safeguard data appropriately.
Employers are required to provide employees with detailed payslips or payroll documentation that specifies the components of their salary, including gross and net pay, deductions, and contributions.
Employers are required to submit payroll-related reports to various government agencies, such as Tax Agency and Social Security. These reports typically include details on employee salaries, withholdings and contributions.
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.
Periodic audits and inspections may be conducted by government authorities to ensure that employers are complying with payroll and tax regulations. Non-compliance can result in penalties and fines.
While employers aren’t legally required to offer a workplace pension in Spain, it’s best practice to do so. There are a few incentives in place to help encourage employers to offer workplace pensions:
Corporate tax deductions: Employers can get a 10% deduction in the corporate tax base for contributions made to occupational pension plans on behalf of employees with a salary of less than €27,000.
Contribution limits: Employers can contribute up to €8,000 annually per employee to these pension plans. Employees can also make personal contributions; however, if the employer’s contribution exceeds €1,500 or if the employee’s annual income is greater than €60,000, the employee’s tax-deductible contribution is limited to the amount contributed by the employer.
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.
Spain has a comprehensive social secutiry system in place, making benefits available to majority of their population. The statutory benefits guaranteed to Spanish citizens includes:
Alongside their wealth of statutory benefits, it's also common for employers to offer additional benefits to their employees. Common supplementary benefits include:
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 workers:
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.
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.
Currently, employees are entitled to 16 weeks of paid maternity leave when there is a newborn, with the potential to increase depending on certain circumstances. 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.
There are plans to extend parental leave from 16 weeks to 20 weeks per parent. This extension was initially anticipated to take effect in 2024 or 2025, but as of now (January 3, 2025), it has not been enacted.
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:
There are plans to extend parental leave from 16 weeks to 20 weeks per parent. This extension was initially anticipated to take effect in 2024 or 2025, but as of now (January 3, 2025), it has not been enacted.
1. Parental leave (Permiso Parental):
An additional 8 weeks of paid leave is available for each parent that can be at any time until the child reaches 8 years of age.
Parents may take this leave in a continuous block or divide it into shorter periods, either on a full-time or part-time basis.
2. Single-Parent Families:
Single parents are now entitled to the combined parental leave of both parents, totalling 32 weeks.
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.
Want to find out more about Cintra Global? We’d love to hear about your global expansion plans and tell you about how we can support you with your international payroll, HR, and expansion needs.
Maling Exchange, Hoults Yard
Walker Road, Newcastle upon Tyne
NE6 2HL
Phone: 0191 4787000
Email: info@cintra.co.uk
Registered in England and Wales
Company No. 03248469
