Spain is a very attractive business destination for multinationals, offering the opportunity to hire highly qualified professionals at competitive labor costs. If you are considering expanding your company in Spain, here are some key points to consider about Spanish Payroll.
Labor regulations are ruled by general legislation (Estatuto de los Trabajadores) (Convenios Colectivos). These agreements have a big impact not only on labor standards but also on the structure of the Spanish payroll. Each job category is regulated by specific Collective Agreements, with a specific salary range per industry, monthly/weekly working hours, vacation days per year, etc.
In Spain, laid off employees are entitled to receive 45 days of indemnity per each year worked in the company up until the 12/02/2012 and 33 days of indemnity for each year worked in the company after 12/02/2012. When facing such a scenario it is important to have the best advice on how to handle the terminations. Our Spanish HR Administration experts have a rich experience in handling terminations and will be able to guide you through the process.
To encourage foreign investments in Spain, authorities allow non-resident companies to operate and hire in Spain without registering a resident legal entity. All non-resident companies must be registered with the Tributary Agency in Spain. As a non-resident company, you will be able to register your Spanish employees with all social protection agencies. Our company has extensive experience in the management of non-resident entities, making possible for your local team to start activity in Spain in a fast and efficient manner.
Social Security Contributions
The social security contributions are divided between the employer and employee. The employee contribution rate is 6,35-6,40% based on gross salary, whereas the employer contribution is around 31-33% of this gross salary. These contributions represent the public insurance system for employees in various contingencies such as illness, accident, maternity, retirement, and unemployment.
Income Tax (IRPF)
Income tax in Spain consists of a system of progressive fees based on the annual remuneration. Companies are required to withhold and pay the tax office on behalf of their employees. These deductions are established on the same rates applicable to the annual tax settlement that the employee must perform. Within the Spanish payroll, it is mandatory to deduct these withholding and to ensure the necessary adjustments (regularization of withholding rate) for the tax payable to fit the amount withheld.
As your Spanish Payroll & HR Administration provider, we are able to offer customized payroll services to both, newcomers as well as established companies. Our Payroll & HR Administration services are fully compliant and up-to-date with the Spanish regulations.
We can handle all initial registrations on your behalf. We can prepare Employment Contracts for your employees according to Spanish law and specifics Collective Agreements, we can act as your labor advisor and help you comply with labor, taxes and Social Security regulations. We can even, act as your "in-country" HR administrator and Local Representative, as well as represent you with the Spanish authorities when required.
Our local Spanish Payroll & HR experts are highly skilled and up to date with the Labour Law changes, so that you can build a competitive business in Spain with us.