Hiring in Spain: What International Employers Need to Know

Getting employer cost budgeting right from the outset matters more in Spain than in many comparable markets, given the size of the employer social security contribution.

Employer of Record in Spain

An EOR is an efficient way to make first hires in Spain without registering with Spanish social security (Seguridad Social) or navigating the applicable sector collective bargaining agreement (convenio colectivo), which can set pay scales and conditions well beyond statutory minimums. It suits companies testing the Spanish market, hiring a small remote or distributed team, or moving quickly on a specific hire before committing to entity setup. It is less suited to companies with an established Spanish presence that mainly need payroll administered, or those planning a large local team where direct workforce control matters.

How payroll works in Spain

Spanish payroll is monthly, with employers withholding personal income tax (IRPF) at progressive rates and employee social security contributions from salary, and separately paying substantial employer social security contributions covering common contingencies, unemployment, and other funds. Contributions are reported and paid through the Social Security General Treasury (Tesorería General de la Seguridad Social) system, and income tax withholding is reconciled with the national tax agency (Agencia Tributaria). Many employees also receive one or two extra statutory payments per year (pagas extra) built into the annual salary structure, which affects both monthly cash flow and contribution timing.

Payroll frequency and reporting obligations

Monthly pay is standard, alongside the statutory extra payments (typically in July and December) that many employment contracts and collective agreements require — these are commonly described as a 13th and 14th month rather than a single bonus. Social security contributions are filed and paid monthly, and annual income tax reconciliation is completed through employer withholding certificates issued to employees. Payslips must follow an official format specifying gross salary, all social security and tax deductions, and net pay. Registration with social security must be completed before an employee's first day, not simply before their first pay run.

Key payroll nuances

Extra statutory payments (pagas extra), typically split across July and December, function as a quasi-mandatory 13th and 14th month depending on the applicable collective agreement, and need to be budgeted into total annual compensation from the outset. The applicable convenio colectivo can materially affect minimum pay, working hours, and even termination terms, and identifying the correct one for a given role and sector is a foundational step, not an afterthought. Temporary and fixed-term contract use is tightly restricted following recent labour reforms, with most new hires now expected to be indefinite contracts by default. Registering a new hire with social security must happen before the start date, with penalties for late registration.

Pay components and employer costs

Typical pay components include base salary, the one or two extra statutory payments, and sector-specific allowances set by convenio colectivo. Employer social security contributions are among the highest in Europe, commonly adding around 30 percent or more on top of gross salary once common contingencies, unemployment fund, and other levies are included — this needs to be modelled explicitly for budget holders used to lower-cost jurisdictions.

Benefits and leave entitlements

Statutory annual leave is 30 calendar days (equivalent to 22 working days), a generous entitlement by international standards. Sick leave is covered through social security after an initial employer-funded period, with specific rules depending on cause and duration of incapacity. Maternity and paternity leave are both well-established, state-funded entitlements of 16 weeks each, reflecting a strong parental leave framework. Public holidays vary by national, regional, and municipal calendars, adding complexity to multi-region hiring. Universal public healthcare reduces the competitive necessity of private health insurance, though it remains a valued benefit for professional roles.

Hiring and employment contracts

Indefinite contracts are now the strong statutory default following labour reforms restricting temporary contract use to narrowly defined circumstances. Probation periods are capped by law and by convenio colectivo, generally shorter for standard roles and longer for more senior or technical positions. Written contracts are effectively required in practice for compliance and registration purposes. Genuine self-employment (autónomo) status is subject to scrutiny where the reality of the working relationship resembles employment, and reclassification carries back-payment liability for social security contributions.

Entity setup in Spain

The Sociedad Limitada (SL) is the most common vehicle for foreign employers, requiring a notarised deed of incorporation, registration with the Commercial Registry, and a minimum share capital of €3,000. Post-incorporation steps include obtaining a tax identification number (NIF) for the company, registering with the tax agency and social security, and opening a Spanish business bank account — often one of the slower steps for foreign-owned entities due to compliance checks. End-to-end setup typically takes four to eight weeks depending on notary and registry timelines.

EOR vs Payroll Management vs Entity Setup — Spain

Frequently asked questions