Spain Country Facts

We provide comprehensive information regarding, Culture, Work life, Taxation, Visa’s & immigration, Labour Law, recruiting in your country of choice and employment contracts.

Global Expansion Made Easy for You

Expanding into Spain generally comes with challenges, however, partnering with us and using Employer of Record (EOR) eliminates the frustrations you could encounter.

Visas

Expanding into a country or hiring a workforce abroad can lead your business to great profits, but unfamiliar laws and regulations can counteract your company’s goals and plans. At Bradford Jacobs, we want to eliminate this complicated part. By using our PEO service, we can arrange all needed visas and permits including the entire application process without your physical presence.

Spanish visa, residency and permit regulations require expert guidance as they vary according to the country foreign nationals live in – the European Union, the European Economic Area and other foreign nationals are all affected by these complex regulations.

Our team is trained to research the latest information on Spanish visas and work permits – therefore, we created a guide to introduce you to the rules and requirements. By reading this guide you will get familiar with all the requirements so you or your employees can start working in Spain in no time.

What types of Work Visas and Permits for Spain are there?

Applicants must decide on the type of visa or permit needed before entering Spain. This will depend on whether the reason for travel is to visit, work, to study or for business.

Spain is a member of the European Union (EU) and citizens of the EU, European Economic Area (EEA), or Switzerland are exempt from requiring visas or work permits.

Nationals from other countries will need one of the following to visit Spain for short-term stays:

  • Transit visa – when people need to pass through Spain
  • A Short Stay Schengen visa – for up to 90 days
  • A Spanish Business visa – for business purposes but not paid work

Most nationalities will need to apply from their home country. However, work is not permitted.

Citizens from Australia, US, UK, Canada, and New Zealand do not require a visa for the first three months.

Longer stays for work or study will require a National Visa (visado nationale) and/or work permit unless they are citizens of the EU, EEA, or Switzerland.

Types of work permits/visas include:

  • Combined Residence and Work Permit – for living and working in Spain
  • Student – for a training or educational course
  • Seasonal work – (Type A)
  • Residence – for retirement or family reunion
  • New Fast-Track Visa – for investors, entrepreneurs, and highly qualified professionals
  • An EU Blue Card – residence permit for qualified non-EU nationals to work in an EU country

Regarding Work Permits, legally companies cannot employ individuals without a work and residence permit which is issued by the Ministry of Labor in Spain. These permits relate to a specific person and a specific job and allows employers in Spain to recruits foreigners from outside the EU.

It is the responsibility of the employer/company to apply for the work permit on behalf of the employee after offering a job and contract. When this has been accomplished, the employee can apply for a visa to enter Spain to work.

How to obtain a Spain Work Visa?

EU, EEA, and Swiss nationals do not require a Spanish work visa or permit. Non-EU foreigners, in their home country, can apply for a number of permits, which include:

A Highly-Skilled Workers’ Permit

  • Applicants can look for employment in ‘Shortage Occupations’, with a scarcity of appropriate candidates within the EU.
  • The employer then requests a work permit and residence visa from the Ministry of Labor, which can take up to eight months to process.
  • After approval, the embassy or consulate issues the permit, and the employee can apply for the work entry visa at the embassy.

A Regular Work Permit

  • Requires a job offer and work contract for highly qualified professionals
  • The employer obtains approval for work residence and permit for his employee
  • The embassy can issue a work entry visa

Non-EU foreigners already in Spain can apply for:

  • A European Blue Card: A work permit for highly qualified professionals e.g., corporate managers, university graduates
  • An Entrepreneur Visa: For business start-ups

How to Apply for Work Visa/Work Permit in Spain

The employer needs to apply on behalf of the employee with the required documents for a Standard National Work Permit. These include:

  • Copy of passport
  • Proof of clean criminal record
  • Medical certificate
  • Three passport-sized photographs
  • Qualifications needed for the position
  • Proof of accommodation
  • NIE ID number if already in the country (Número de Identidad de Extranjero)
  • Employer’s social security number
  • A job offer with contract including labor conditions
  • Full description of job and the company’s activity
  • Proof of employer’s financial assets (if needed)
  • Corresponding Spanish work permit visa application form

Other documentation may be required from the employer. Once the employer has provided all relevant paperwork and the application has been successful, the employee applies at the local embassy or consulate for a visa providing the following:

  • Original valid passport
  • Two photographs
  • Visa application, printed and completed
  • Confirmation of the work permit
  • Medical certificate
  • Payment of visa fee
  • Criminal records or a police conduct certificate of past five years

When documentation is submitted, the visa takes about 72 hours and is stamped in the passport. The worker can now enter Spain legally. Once in Spain, a NIE (national identity card) must be applied for and then a residence card (TIE).

You may also obtain more information from the Immigration department regarding regulations and requirements for highly-qualified professionals, as well as application forms and templates.

Tax Laws

At Bradford Jacobs, our Employer of Record (EOR) platforms provide reliable solutions for companies wishing to establish their presence in the Spanish economy. From the first steps of setting up operations to ensuring compliance with the local payroll laws and regulations, we offer dedicated Spain Payroll solutions that can be personalized to your requirements.

We aim to make global expansion easy. At Bradford Jacobs, we navigate the administration of the Spain payroll system for you, and we also make the returns and associated payments for income tax and social security contributions directly from our payroll system to the local tax authorities. We do the work, so you do not have to.

We appreciate that all companies have their own challenges, and that’s what we do best! We provide dedicated Spanish payroll solutions customized to your specific needs. Let us help you speed up the process and keep you ahead of the game. We are just a click away.

When expanding into a new country, you may encounter some challenges regarding payroll, but allow us to take the reins and answer any of your questions and concerns with our trusty guide on payroll for Spain.

What Spain Payroll Options are available for Companies?

  • Remote payroll – This option allows businesses to operate under a single payroll system, by adding employees in Spain to your parent company’s payroll. However, these employees must operate under different regulations, which is likely to cause problems.
  • Internal payroll – You may operate payroll from your subsidiary, especially if you are committed to growing your company’s presence in Spain. However, this does require hiring dedicated HR staff who understand Spanish employment and compliance laws.
  • Spanish payroll processing company – If you are considering outsourcing, then working with a Spanish payroll company will help in processing your payroll – but not when it comes to compliance.
  • Spanish payroll outsourcing – However, there is another option available which solves both concerns – by working with Bradford Jacobs. We can handle both your payroll and compliance for all your employees in Spain. We take the administrative stress off your shoulders so you can focus on what you do best.

Spain Payroll Services

There is no simple solution when it comes to operating payroll in Spain. In dealing with most bureaucracy, you need expertise to unravel the red tape. The smart move is to find the right people to be your experts while you concentrate on driving your business forward.

Running payroll in Spain requires an understanding of employment and tax laws and how it affects personal and corporate taxation, social security contributions, pension deductions and so forth. In fact, most aspects of ‘working’ shapes payroll and what we all want to know is ‘the bottom line’ – what’s in your pay-packet, business costs and getting it wrong can lead to fines and an unhappy workforce. Here are some of the outsourced payroll services that need to be dealt with:

  • Applying for a trading name
  • Applying for a foreigner’s tax registration number
  • Registering with the national trade registry (Registro Mercantil Central, RMC)
  • Deciding on a type of company
  • Recording the daily working hours of all employees, following implementation of a law in May 2019
  • Registering employees’ contracts with the social security authorities before employment starts
  • Registering employees’ contracts with the Public Employment Service
  • Complying with national minimum wage as laid down by the Ministry of Employment and Social Security
  • Withholding national and regional tax from employees’ salaries
  • Making monthly contributions to Spain’s National Social Security Institute
  • Opening a company bank account after producing the correct documentation
  • Creating employment contracts
  • Applying special expatriation status (if applicable)
  • Calculating monthly salary and creating pay slips and completing tax returns
  • Researching available tax-free allowances

What is required to set up Payroll in Spain?

Before a company can operate payroll in Spain it must follow strict procedures to set up a subsidiary. These include:

  • Obtaining a company Tax Identification Number (Certificado de ldentificacion Fiscal, CIF)
  • Applying for certificate of denomination for the subsidiary from the Commercial Registry (valid for six months)
  • Opening Spanish bank account to deposit share capital and receive disbursement certificate
  • Presenting public deeds of incorporation before a notary, including bank certificate, certificate of denomination, company bylaws and identity of managers
  • Presenting the D1-A form for declaring foreign investments to the Registry of the Directorate General for Trade and Investment at the Ministry of Economy
  • Applying for final registration of public deed of incorporation in the Commercial Registry (usually within 15 days)
  • Receiving the final CIF from the Commercial Registry
  • Completing census registration for tax, VAT, social security etc.

Entity Set Up

Global expansion into Spain generally means that you need to set up an in-country entity. However, by partnering with us you create the possibility to bypass this process and utilize our Italian entity. By using our PEO service we take care of the complicated paperwork.

Expanding into a new country is always an adventure, but we believe this adventure should be exciting instead of just frustrating and time-consuming. Therefore, we have been supporting companies in over a hundred countries with their expansion plans.

Once the subsidiary is legally established, other crucial factors must be dealt with. Tax processing, filing accounts, legal compliance, workforce management, payroll and recruitment add up to a hefty workload.

In this guide, we will share which documents you need to establish an entity in Spain, but also where you will need to register your business address and company’s name. We will also break down the advantages and disadvantages of setting up an entity in Spain.

How to set up a Spain Subsidiary

Spanish law treats subsidiaries of foreign companies the same as a domestic Spanish company, with no nationality requirements for directors or shareholders. All companies, whichever their form, operate under the Spanish Companies Act (Ley de Sociedades de Capital). The Act sets out the framework for registration, share capital, investors etc.

The procedure to set up a subsidiary in Spain can usually be completed in six to seven weeks. Steps must include:

  • Applying for a trading name.
  • Obtaining company Tax Identification Number (Certificado de ldentificacion Fiscal, CIF) which is a letter followed by eight digits, from the Ministry of the Interior.
  • Applying for certificate of denomination for the subsidiary from the Commercial Registry (valid for six months).
  • Opening Spanish bank account to deposit share capital and receive disbursement certificate.
  • Minimum of €3,000 (US$3,540) share capital for a limited liability subsidiary, or €60,000 (US$ 70,900) for a joint stock company.
  • Presenting public deeds of incorporation before a notary, including bank certificate, certificate of denomination, company bylaws and identity of managers.
  • Presenting the D1-A form for declaring foreign investments to the Registry of the Directorate General for Trade and Investment at the Ministry of Economy.
  • Applying for final registration of public deed of incorporation in the Commercial Registry (usually within 15 days).
  • Receiving the final CIF from the Commercial Registry.
  • Completing census registration for tax, VAT, social security etc.

Once ‘up and running’ other procedures must be followed to operate payroll for your staff. These include:

  • Registering employees with the Social Security Institute (Instituto Nacional de la Seguridad Social – INSS) before employment starts.
  • Registering employees with the Spanish Tax Authority (Agencia Tributaria).
  • Creating employees’ contracts and registering them with the Public Employment Service.
  • Complying with national minimum wage as laid down by the Ministry of Employment and Social Security and other statutory benefits and guarantees.
  • Withholding national and regional tax from employees’ salaries to the INSS and the Tax Authority.
  • Recording the daily working hours of all employees, following implementation of a law in May 2019.
  • Applying special expatriation status (if applicable).
  • Calculating monthly salary schedules and creating pay slips and completing tax returns.
  • Researching available tax-free allowances.

What you need to set up a Spain Subsidiary

Incoming companies would typically choose to set up a Limited Liability Company (LLC), known as a Sociedad de Responsabilidad Limitada (SRL or SL), or a Joint Stock Company (Communidad de Bienes, CB), which operate under Spain’s Companies Law. Requirements include:

  • Written evidence that the management body or board of directors of the parent company have agreed to create a subsidiary.
  • The agreement translated into Spanish by a certified translator.
  • Proof that the Spanish consulate nearest to the location of the parent company certifies it is incorporated according to the regulations of the home country.
  • Confirmation from the office of the Commercial Register (Registro Mercantil) that the subsidiary’s chosen name is unique in Spain.
  • Proof the €3,000 (US$3,540) minimum share capital for a limited company – €60,000 (US$ 70,900) for a public limited or joint stock company – has been deposited in the registered bank.
  • A draft of the company statutes.
  • Notarized public deeds of the subsidiary’s incorporation.
  • Proof of registration with the Commercial Register and the Foreign Investment Register at the Ministry of Economy.

Benefits of setting up a Spain Subsidiary

Foreign companies targeting Spain’s economy – the 14th largest in the world and fourth in the European Union (EU) – typically set up a limited liability subsidiary. Known as a Sociedad de Responsabilidad Limitada (SRL or SL), it operates under Spain’s Companies Law in the same way as a local company. Another option, however, is the Joint Stock Company (Communidad de Bienes, CB).

Setting up a subsidiary in Spain enables a foreign company to test the market in a new territory without committing to capital investment. Spain could provide a steppingstone for further expansion into the European Union, while increasing the international credibility of the parent company.

There are also specific benefits:

  • The subsidiary is a separate legal entity to the parent company
  • Subsidiaries have the flexibility to operate under its own business name and pursue independent business activities once it has obtained any necessary licenses
  • The international profile of the parent company will be boosted
  • The subsidiary has the same legal standing as local companies and can be eligible for government tax incentives and benefits
  • The parent company is not liable for the obligations and debts of the subsidiary

Spain Subsidiary Laws

Under Spanish law a subsidiary is a legal entity independent from the foreign parent company with its own legal personality. The subsidiary is legally resident in Spain and therefore subject to all Spanish laws and company regulations under the Companies Act.

Spain makes no distinction between foreign-owned subsidiaries in Spain and local companies. Accordingly, the foreign subsidiary is subject to all local company tax and accountancy laws and must record its accounts and any company activity in the Commercial Register.

If the subsidiary is set up as a limited liability company €3,000 (US$3,540) share capital must be deposited in the bank, with €60,000 (US$ 70,900) required for public limited or joint stock companies.

The Market

Foreign companies expanding into Spain are entering the world’s 14th largest economy and fourth largest in the European Union (EU), where an outward-looking government is intent on encouraging international expansion.

Spain has strong manufacturing sectors based on textiles, chemicals, and metallurgy, with agriculture and tourism traditionally powerful areas supporting the economy.

However, setting up shop in an unfamiliar place comes with its own challenges. Foreign businesses must comply with employment, tax, payroll, and corporate legislation whilst ensuring that their employees are working productively and efficiently.

Work alongside our Professional Employer Organization (PEO) recruitment specialists, then our Employer of Record (EOR) in-country experts to handle every aspect of compliance. Employers can depend on our in-depth knowledge of Spain, its work culture and business practices.

Here we have written out some basic summaries of what you need to make the transition into Spain’s market, no matter the industry you are in.

Starting a Business in Spain

The World Bank’s Doing Business Report ranks Spain only 97th out of 190 nations for ease of starting a business. But once you are established business life becomes easier – with Spain rated No. 1 for trading across borders and in the top 50 for protecting minority investors, paying taxes, enforcing contracts, and resolving insolvency.

Spain’s position for ease of starting a business reflects the procedures that must be followed to comply with employment and payroll regulations, both for employers and their employees. Procedures include:

  • Applying for a unique trading name
  • Obtaining company Tax Identification Number (Certificado de ldentificacion Fiscal, CIF) which is a letter followed by eight digits, from the Ministry of the Interior
  • Registering with the Commercial Register (Registro Mercantil)
  • Incoming companies would typically choose to set up a Limited Liability Company (LLC), known as a Sociedad de Responsabilidad Limitada (SRL or SL). Another option is to establish the subsidiary as a Joint Stock Company (Communidad de Bienes, CB)
  • Registering employees with the Social Security Institute (Instituto Nacional de la Seguridad Social – INSS) before employment starts
  • Registering employees’ contracts with the Public Employment Service
  • Opening a company bank account after supplying the correct documentation
  • Presenting public deed of incorporation before a notary, including bank certificate, certificate of denomination, company bylaws and managers’ identities
  • Presenting the D1-A form for declaring foreign investments to the Registry of the Director General for Trade and Investment at the Ministry of Economy
  • Applying for final registration of public deed of incorporation in the Commercial Register, usually within 15 days
  • Receiving the CIF from the Commercial Registry
  • Completing census registration for tax, VAT, social security

Expanding Business into Spain

Expanding your company into a foreign territory will demand a detailed blueprint, answering the essential questions as to how and when you will achieve your aims.

If Spain is the target, those questions will center on whether you migrate staff or recruit in-country, who will handle the payroll, how do you comply with laws on tax, social security, termination and severance, entitlements, and benefits.

The major cities of Madrid, Bilbao, and Barcelona host the majority of foreign subsidiaries, multi-nationals, major Spanish companies, manufacturing centers and government-controlled entities, with a number of regional hubs completing the Spanish market.

Researching the Spanish market is a vital first step. Partnering with Bradford Jacobs, from the consultation stage onwards, will access our know-how of the Spanish economy and how it works; its manufacturers, distributors, where to find business support, production facilities and offices and where to find the best qualified staff for your sector. We will also know who your competitors are.

Spain Business Facts

  • Capital city – Madrid
  • Population – 47 million
  • States and Provinces – 50 provinces and 17 autonomous regions
  • Official language – Spanish
  • Economy and world ranking – 14th among the world’s economies and fourth largest in the European Union (EU), GDP €1 trillion (US$1.2 trillion)
  • Leading sectors – Tourism, manufacturing, agriculture, textiles, chemicals, metallurgy
  • Main exports – Cars, refined petroleum, vehicle parts, packaged medicaments, other commodities
  • Main imports – Crude petroleum, vehicle parts, cars, packaged medicaments, and other commodities
  • Main trading partners – Exports to: France, Portugal, Italy, and UK. Imports from: China, Germany, France, Italy, and Netherlands
  • Government – Unitary State, Parliamentary system, Constitutional Monarchy
  • Currency – Euro

Advantages and Challenges of the Spain Market

Advantages of expanding into the Spanish economy:

  • Economic areas: Ideal location with access to Europe, Middle East, Africa (EMEA) region, strong cultural and trade links to Latin America, member of the European Union (EU) with premium access to world’s largest market with population of 500million.
  • Trading: 17 double taxation treaties with Central and Latin America and nine with EMEA members.
  • Economy: Spanish government is pro-free trade and pro-investment with Spain ranked ninth in World Investment Report for attracting foreign investment.
  • Logistics: Modernized communication network of rail and subway systems, 46 state-owned ports on Atlantic and Mediterranean coasts, three of Europe’s top 10 container ports.
  • Business: Growing tech sector with more than 70 technology parks.

Challenges of operating in the Spanish economy:

  • Business focus: The International Monetary Fund predicts the Spanish economy will continue slowing into 2021 before being led back into growth by domestic spending.
  • Work force: Spain has one of the highest unemployment rates in the EU, particularly in the under-25s, which led to highly qualified workers leaving for other EU states. The government has pledged to reverse this ‘brain drain’ with incentives to encourage their return, particularly university graduates.
  • Business practices: Seven procedures must be completed to start a new business, compared with an Organization for Economic Cooperation and Development (OECD) average of five for other European nations, rating Spain only 97th out of 190 nations in the World Bank’s Doing Business Report.
    Obtaining construction permits requires 13 procedures over 147 days on average, including soil and topographical studies.
  • Bureaucracy: Paying taxes can take up to 170 hours of office time a year dealing with eight separate payments, with employer contributions much higher than the OECD average.

Employment Contracts

A successful business largely depends on its employees. By creating working contracts that include the right terms and benefits there will be no misconception and the perfect work-life balance can be created. At Bradford Jacobs, this is our aim, and we support companies in over 100 countries with creating compliant and balanced labor contracts.

Our team keeps track of the Spanish laws and regulations on a daily basis to be duly aware of updates that can be implemented in working contracts. By using our PEO and EOR services, we can provide compliant labor contracts for employees in Spain, including local benefits.

To support your plans, we made this guide including the basics of employment contracts in Spain. After reading this guide you will know everything about social security, notice periods, and the average working hours.

How do you hire Spain Employees?

Companies hiring staff for their international expansion into Spain face extensive tax, employment, and social insurance regulations. Failure to comply with Spanish regulations and European Union (EU) mandates risks fines and sanctions.

Spain’s employer-employee relationship is governed mainly by the Workers’ Statute (Estatuto de los Trabajadores), the Spanish Labor Law and a host of mandates and decrees that provide significant benefits and guarantees for employees.

This framework covers payroll and tax law, social security, termination and severance rights, vacations, sick leave, minimum wages, and other areas. These factors apply particularly when a foreign company wants to hire local employees in Spain, as they must comply with all obligations on behalf of the employees.

In drawing up their agreement, parties cannot ‘opt out’ of statutory or mandatory regulations and some specific requirements should be considered:

  • Contracts can be verbal, which is rare, or in writing, but must be transferred to written form at either party’s request during the contract’s term.
  • Certain contracts must be in writing, such as short-term and temporary agreements and contracts for lawyers and executives.
  • Contracts must be lodged with the Public State Employment Service within 10 days of coming into force.
  • Contracts must stipulate salary, any supplementary payments and frequency of remuneration.
  • Any probationary period, up to a maximum of six months but more usually for two months, must be included.
  • When employment exceeds four weeks, within two months of starting the employee must be given written details of: estimate of employment duration for temporary arrangements, place and category of work, base salary and any benefits, total working hours, holiday allowance, notice periods, any applicable collective agreements.
  • Fixed-term or temporary contracts – if employees are asked to work beyond the fixed term, the contract becomes ‘indefinite’, and the employee becomes entitled to the standard severance on termination.
  • The Labor Law decrees that the party terminating the contract must provide a minimum 15 days’ notice.
  • Substantial changes to a contract affecting an employee’s working hours, remuneration or method of work may entitle them to terminate the contract with compensation of 20 days’ pay for each year of service up to a maximum of nine monthly payments.

Employment Contracts in Spain

Employment contracts (copia basica) in Spain must be lodged with the Public Employment Office. Seasonal contracts must be drawn up on a template provided by the employment office. Royal Decree 28/2020 defined remote working as comprising 30% of regular working hours undertaken from home or any remote location. Working from home cannot be unilaterally applied by either the employer or employee.

Here are some common contract types:

  1. Indefinite Employment Contracts (Contrato indefinido): These are identified from the start of the relationship by having no end date or time limit. In the absence of any other formal contract, an employee is deemed to be on an open-ended, indefinite contract.
  2. Fixed term or Temporary Employment Contracts (Contrato temporal): These apply to certain circumstances, such as:
    – Specific task, project or service that takes an indefinite time. If the project lasts more than 12 months, 15 days’ notice must be given
    – To deal with a short-term employment market or seasonal work
    – To temporarily replace a full-time employee, whose role must be specified in the contract
  3. Probationary Contracts: If no limits apply from a collective agreement, the terms are normally six months for qualified employees, two months for unqualified and three months for companies with fewer than 25 staff.
  4. Work Experience Contracts: For between six months and two years for university or college graduates
  5. Trainee or Apprenticeship Contracts: For workers between ages of 16 and 21, usually between six months and two years but can be extended to a third year. Under-18s are prohibited from working between 10pm and 6am or for more than eight hours per day; they must have a minimum 12 hours’ rest between shifts and a 30-minute break after four-and-a-half hours’ work.
  6. Collective Bargaining Agreements: Spanish law defines these as written agreements between an employer and employees’ representations, or between employers’ associations and trade unions. Negotiations take place at national, industry and company level. National agreements provide the framework for lower-level bargaining. It is estimated that collective agreements cover around 80% of Spain’s workforce.

What Employment Laws exist in Spain?

Spanish labor law is primarily national in scope, however some aspects such as public holidays and social security regulations may be devolved to Spain’s 17 autonomous regions.

The most important element in employment law is the Workers’ Statute (Estatuto de los Trabajadores) with its various laws and decrees covering employment relations collated in the Labor and Social Security Code (Codigo Laboral y de la Seguridad Social). Other laws and decrees deal with related matters, such as health and safety, trade unions, strikes, special types of employment contracts and relationships, social security, training, and temporary agency work.

Pay and conditions for around 80% of Spanish employees are set by collective agreements, mainly at industry level. Company-level agreements take precedence over industry-level agreements.

Bradford Jacobs’ complete knowledge of Spanish employment laws makes us the essential partner for expansion into Spain. The global reach of our Professional Employer Organization (PEO) networks allied to the expertise of in-country Employer of Record (EOR) teams guarantees a smooth entry into your new territory – and compliance with all regulations, which include:

  • National Minimum Wage: The national minimum as set by the Ministry of Employment and Social Security for 2021 in Spain remained fixed at €1,108.30 (US$1,308) per month equating to €13,300 (US$ 15,709) per year, considering 12 equal monthly payments.
  • Working Hours: Regulated by Spanish law. Full-timers over 18 must not work more than nine hours daily up to a maximum of 40 hours a week, averaged over a year.One-and-a-half days’ consecutive rest per week is allowed with a 12-hour break between daily shifts. Working days exceeding six hours have a break of 15 mins.
  • Overtime: Overtime is not obligatory unless stipulated in a collective bargaining agreement or contract. Any work over the maximum allowed normal working hours is considered overtime and cannot exceed 80 hours annually.Compensation for extra hours can be paid for at a premium or time off given in lieu. Since May 2019 employers must keep records for four years of employees’ daily working hours.
  • Paid Vacation: Employees are entitled to a minimum of 30 calendar days (22 working days) per year paid leave with one holiday period a minimum of two weeks. Employers cannot replace holidays with paid compensation.The holiday calendar is set by each company and agreed upon by workers and employers. Additionally, there are public, regional, and local paid holidays.
  • Sick Pay: There is no payment for the first three days, with 60% of salary for days four to 20. For longer absences, or injuries suffered at work, employers must pay 75% of salary which is reimbursed by the Institute of Social Security.
  • Maternity/Paternity Allowance and Entitlements: Maternity benefit is for a minimum statutory 16 weeks, taken consecutively including weekends and holidays with a minimum six weeks taken after birth. The mother is entitled to full pay from the Spanish Social Security Institute (Instituto Nacional de Seguridad Social, INSS).Additionally, all pregnant women are entitled to healthcare before, during and following the birth at hospitals belonging to the National Health Service (Sistema Nacional de Salud).Paternity leave increased to 16 weeks from 2021, the same as for the mother, but the allowance is not transferrable between partners.
  • Discrimination: All types of discrimination are prohibited, either directly or indirectly, on grounds of gender, marital status, age within limits established by law, racial or ethnic origin, social status, religious beliefs, political ideas, sexual orientation, affiliation, or non-affiliation to a union or for reasons of language inside the Spanish state.Employees cannot be discriminated against for reasons of disability, provided they are able to perform the role in question.
  • Termination and Severance: Grounds for individual termination include end of contract for a specific job, resignation, and retirement through permanent illness.Objective dismissals can be based on workers’ incompetence, inability to adapt to technical change, poor attendance and redundancies based on economic, technical, or organizational grounds.In the event of fair dismissal, legislation requires employees are paid a minimum legal compensation of 20 days’ pay for each year of service, up to a maximum of 12 months’ pay.In unfair dismissals, an employee on an open-ended contract is paid a minimum legal compensation of 45 days’ pay for each year of service, up to a maximum of 43 months’ equivalent pay. In enterprises of fewer than 25 employees, the Public Fund of Wage Warranty (Fondo de Garantía Salarial) pays 40% of the remuneration of employees in collective redundancies.

Benefits

Happy and satisfied employees make your business thrive and lead to even better profits. However, the specific benefits for employees in Spain might not all be familiar to you yet. By using our PEO and EOR service we can provide compliant labour contracts for employees in Spain including local benefits.

When expanding your company’s presence in a new country, you need to ensure compliance both in your employment contracts and benefit guarantees. These involve social security contributions, sick leave, health insurance, and unemployment, to name a few. In Spain, benefits are guaranteed by national legislation as well as collective agreements with trade unions or workers’ councils.

Our guide will explain what benefits and employee compensation are guaranteed, and what can be modified, for any employer who wishes to expand their business into Spain.

It is vital that employers have a firm grasp of what is guaranteed for their employees, as this will affect contract negotiations.

What Compensation Laws exist in Spain?

In Spain, a comprehensive framework of employment laws and regulations guarantees employees enjoy protection in various areas. Legislation covers such as minimum wages, social insurance, redundancy, termination, and severance, working hours, vacation leave, maternity, and paternity issues and more.

Statutory and mandatory minimums cannot be undercut by collective or trade union agreements that are concluded with employer organizations, although they can improve entitlements for employees.

Drawing up contracts is tricky enough, but in Spain it is vital to fulfil responsibilities to your employees over benefits, compensation, and minimum requirements. Do not take the risk of ignoring them. Compensation and benefits include:

  • Social Insurance: Anyone working in Spain must register with the Social Security Institute (Instituto Nacional de Seguridad Social, INSS) and pay contributions to the system via their taxes, either as remitted by their employer or directly if they are self-employed (autónomo).Spain’s social security program reaches around 90% of the population, covering such as sickness, maternity, industrial injuries, pension, invalid and death benefits. Spain has among the highest benefits in the European Union (EU) but also among the highest contributions, the bulk of which is carried by employers.In 2021 employers pay 29.9% of employees’ salaries, plus a further average 1.5% to cover accidents and illness. Employees contribute 6.35%.
  • National Minimum Wage: The national minimum as set by the Ministry of Employment and Social Security for 2021 in Spain remained at €1,108.30 (US$1,308) per month equating to €13,300 (US$ 15,709) per year, considering 12 equal monthly payments.
  • Working Hours: Full-timers over 18 must not work more than nine hours each day up to a maximum of 40 hours a week, averaged over a year. One-and-a-half days’ consecutive rest per week is statutory with a 12-hour break between daily shifts. Working more than six hours requires a break of 15 mins.
  • Overtime: Overtime applies if stipulated in a collective bargaining agreement or contract and is any work over the maximum permitted normal working hours.Overtime cannot exceed 80 hours annually. Compensation for extra hours can be paid at a premium or time off given in lieu. Since May 2019 employers must keep records for four years of employees’ daily working hours.
  • Paid Vacation: Employees are entitled to a minimum of 30 calendar days (22 working days) annual paid leave with one holiday period comprising a minimum of two weeks. Employers cannot replace holidays with paid compensation.The holiday calendar is set by each company and agreed by workers and employers. Additionally, there are public, regional, and local paid holidays.
  • Sick Pay: 60% of salary applies for days four to 20. For longer absences, or injuries suffered at work, employers must pay 75% of salary which is reimbursed by the Institute of Social Security.
  • Maternity/Paternity Allowance and Entitlements: Maternity allowance is a minimum 16 weeks, taken consecutively including weekends and holidays with a minimum six weeks taken after birth. The mother is entitled to full pay from the Spanish Social Security Institute.Additionally, all pregnant women are entitled to healthcare before, during and following the birth at hospitals belonging to the National Health Service (Sistema Nacional de Salud).Paternity leave increased to 16 weeks from 2021, the same as for the mother, but the allowance is not transferrable between partners.
  • Discrimination: Gender, marital status, age within limits established by law, racial or ethnic origin, social status, religious beliefs, political ideas, sexual orientation, affiliation or non-affiliation to a union or reasons of language inside the Spanish state are all areas where discrimination is prohibited.Employees cannot be discriminated against for reasons of disability, provided they are able to perform the role in question.
  • Termination and Severance: Grounds for individual termination include end of contract for a specific job, resignation, and retirement through permanent illness. Objective dismissals can be based on workers’ incompetence, inability to adapt to technical change, poor attendance and redundancies based on economic, technical, or organizational grounds.In the event of fair dismissal, legislation requires employees receive a minimum legal compensation of 20 days’ pay for each year of service, up to a maximum of 12 months’ pay.In unfair dismissals, an employee on an open-ended contract is paid a minimum legal compensation of 45 days’ pay for each year of service, up to a maximum of 43 months’ equivalent pay.In enterprises of fewer than 25 employees, the Public Fund of Wage Warranty (Fondo de Garantía Salarial) pays 40% of the remuneration of employees in collective redundancies.

Social Security in Spain

In 2021 employers must pay 29.9% of employees’ salaries, plus a further average 1.5% to cover accidents and illness. Employees contribute 6.35%.

Everyone working in Spain must register with the Social Security Institute (Instituto Nacional de Seguridad Social, INSS) and pay contributions to the system via their taxes, either as remitted by their employer or directly if they are self-employed (autónomo).

Spain’s social security program reaches around 90% of the population, covering such as sickness, maternity, industrial injuries, pension, disability, and death benefits. Spain has among the highest benefits in the European Union (EU) but also among the highest contributions, the bulk of which is carried by employers.

Some foreigners can be exempt from social security payments for up to five years in the event of a qualifying agreement between Spain and their home country.

Top Talent

Recruitment can be a tricky business, especially when a company is venturing to unfamiliar countries and exploring new markets. This is where we come in to oversee the process for you – Bradford Jacobs’ expertise and over 20 years of experience in international recruitment services is indispensable for expansion into Spain.

Hiring the right talent in Germany to expand your company can result in a thriving business with numerous opportunities. However, the recruitment process can be complicated when you have no physical presence in Spain yet. Our PEO and EOR service can be the solution for your company.

Are you curious about the recruitment process in Spain? In this guide, we will share the ground rules of hiring and recruiting talent in Spain. Our comprehensive knowledge of all Spanish employment sectors and understanding of the culture and customs guarantees an untroubled transition.

The Recruitment Process in Spain

The first stage of making your company operational in Spain is recruiting the staff. It is vital to know where you can locate the best talent and who may be a perfect fit for your company’s plans.

Spaniards often follow an informal route to finding the jobs they want, through word of mouth, referrals, and of course social media. Despite relatively high unemployment, especially in the youth sector, compared with other European Union members there is still a call for candidates with specialist skills.

Sectors such as the automotive industry, pharmaceutical companies, IT enterprises and food manufacturing are always looking for candidates with the right qualifications and experience.

Foreign companies do not need to establish a local subsidiary to hire in Spain, but once the candidate has been selected, they must follow various procedures:

  1. The hiring process must begin with negotiating the employment contract, typically an indefinite contract, and the precise contract must be drafted before work begins
  2. Contracts must state the salary in euros and include precise details of compensation, benefits, termination clauses and any probation periods
  3. Companies must register each employee with the social services and tax authorities
  4. New contracts must be registered with the social security authority before employment and with the Public Employment Service within 10 days of starting work
  5. Probationary periods are usually restricted to two months, except for companies with fewer than 25 employees (three months) and qualified technical staff (six months)

The recruitment process is time-consuming and requires dedication – a difficult task when faced with a host of other complicated issues involved in international expansion. By engaging Bradford Jacobs as your Employer of Record (EOR) we will provide all the answers. We will convert your expansion blueprint for Spain into an action plan with a few simple steps, including:

  • Our legal entity in Spain ensures compliance with registration procedures, employment contracts, payroll, HR regulations, tax law and, where required, Spanish visas and work permits
  • Bradford Jacobs deal with employee’s daily work records and any overtime or expenses and invoice you, the client
  • Once paid, we deduct all withholding contributions for the Spanish tax and social security authorities and transfer them into the employees’ appointed social security accounts
  • You retain operational control over your employee. Within days you have an international presence in a new territory, without risking the expense or stress of setting up a subsidiary or branch

Within a few days, your company has international presence in Spain – in a prime position to explore further expansion among other European markets without risking the expense or stress of setting up your own subsidiary or branch office in the country.

Checks you can make on Spanish Employees

  • Immigration Compliance: Potential employers should require proof that foreign workers possess the correct documents permitting them to work in Spain.
  • Criminal Records: Information regarding criminal records is protected under the Spanish Constitution and public disclosure is forbidden. Courts may allow disclosure for certain professions, such as public administration, financial institution managers and those working with minors. For certain roles, such as security guards, the applicant can provide a certificate proving they do not have a criminal record, but this cannot be retained by the employer.
  • Discrimination: Interviewees and employees cannot be discriminated against on grounds of gender or sexual orientation, marital or social status, age within limits specified by law, ethnicity, religious or political beliefs, union membership or language within the Spanish state.
  • Privacy: A combination of the Spanish Data Protection Act (2018) (SDPA) and the European Union’s General Data Protection Regulation (GDPR) applies protection for employees as to how their personal data is obtained or held by employers or ‘controllers or processors’ information. The SDPA tightened up basic requirements of the GDPR.

Permitted checks include:

  • Verifying identity via ID or passport
  • Checking CVs and educational qualifications with the applicant’s permission.
  • References are usually supplied by previous employers directly to the candidate for them to forward to the new employer

Basic Facts on Hiring in Spain

  • Employers and employees can agree on employment terms and conditions, but they must comply with minimum standards set out in state and regional laws and any collective bargaining agreements.
  • Contracts can be verbal, though this is rarely the case, or in writing. They must be written up.
  • Certain contracts must be in writing, such as short-term and temporary agreements and contracts for lawyers and executives.
  • Contracts must stipulate salary, any supplementary payments and frequency of remuneration and holiday allowances.
  • Contracts must be lodged with the Public State Employment Service within 10 days of coming into force.
  • Any probationary period, up to a maximum of six months but more usually for two months, must be included in the contract.
  • The main source of employment law in Spain is the Workers’ Statute, which defines respective rights of employer and employees, employment contracts, procedures for dismissal and collective agreements. Various statutory minimums are guaranteed.
  • In 2021, the national minimum wage in Spain remained fixed at € 1,108.3 (US$1,308) per month, equating to €13,300 (US$ 15,709) per year considering 12 payments per year.
  • Sickness benefit depends on length of absence, with employers paying 60% for days four to 20 and the Institute of Social Security reimbursing the employer 75% thereafter.
  • Employees must not average more than 40 hours a week over a year or exceed 80 hours overtime annually. Employers must keep daily records of employees’ hours for four years.
  • Employees are entitled to a minimum 30 calendar days (22 working days) annually, with one vacation comprising a minimum of 14 days.
  • Maternity/Paternity leave is for a minimum 16 weeks with a minimum six weeks taken after birth. From 2021 paternity leave is also 16 weeks.

Work Culture

To do business in Spain, it is vital to have a good understanding of its business or work culture. Making the right impression with the right people is the key to success in Spain, and it is important to back this up with the right research on the market and potential business associates.

As a global PEO (Professional Employment Organization) it is our goal to be familiar and updated with the business culture in the country we work with and in. By sharing our knowledge about the Spanish work culture, we want to support your global expansion plans. Therefore, we will address all the aspects of the work culture in Spain to start your expansion well-informed.

When planning business in a new territory, you should be well prepped on the culture and etiquette and not only in the workplace. Spain has a warm, friendly, and laid-back attitude in general and the Spanish can be traditionalists. However, with an up-and-coming young go-getting work force who may have been trained abroad bringing with them a new vision of Spain, culture in the workplace is changing.

Getting to know each other first can be key, including any regional differences. For instance, business may not be the first thing on the agenda but establishing the right atmosphere through points of interest such as sport or music can help to build respect and trust. So, take your time and be prepared for lively discussions, the necessity for consultation, and to negotiate over lunch or dinner.

Adjusting to Spanish work culture can be a big step for incoming employees as they deal with the business practices surrounding management, hierarchy, negotiations, and customs. It is time to get down to business, so for instance:

  • Changing attitudes: A younger management class, many having worked or been educated abroad, are changing the traditional hierarchical attitudes to business structure. But a more traditional mindset prevails in family businesses and government agencies.
  • Negotiations: These are generally undertaken between peers. If issues arise it is best to get your boss to talk to their boss.
  • Women in the workplace: As of October 2020, 37% of managerial positions in Spain were held by women, slightly above the European Union average. Foreign women are readily accepted as managers, but northern Europeans or Americans may have to adjust to hearing male co-workers commenting on their appearance.
  • Business meetings: These tend to confirm or communicate decisions already made at a higher level. Personal chat is OK and exchanging views can become noisy while staying friendly.
  • Business relationships: Building trust and relationships socially is preferred before starting formal negotiations, especially through lunches and dinners. Final decisions are usually made by senior managers, or solely by chief executives.
  • Punctuality: The famous siesta is no longer a feature of Spanish business, but the concept of punctuality is flexible. At company level the working day may not get into gear until 10am and carrying on till 8pm is not uncommon. Lunches can last two hours, and employees tend to start drifting away by 3pm on Fridays. But foreign employees should start by being punctual before the office routine becomes clear.
  • Office routine: Meetings should be planned well in advance and avoid scheduling between 2-5pm, in case of long lunches.
  • Introductions and greetings: Business greetings are extensive. Shake hands with everyone, light kisses on the cheek are only exchanged by long-term acquaintances. Address Spaniards with the relevant prefix, senor, senora, or senorita until the host initiates using first names.
  • Dress code: Spaniards tend to take great care over appearance for business meetings and the dress code is formal, professional, and classic featuring dark suits for both men and women.

Spain Minimum Wage

In 2021, the national minimum wage in Spain remained fixed at € 1,108.30 per month (US$1,308), €13,300 per year (US$15,709), considering 12 payments per year. This is set by the Ministry of Employment and Social Security.

Probation Periods in Spain

Probation periods are not compulsory and vary between two months, typically, to a maximum of six months depending on category of worker and must be confirmed in the employment contract e.g., six months for college graduates and technicians; two months for all other workers.

Employment may be terminated by either party for any reason, without notice and without any compensation, unless otherwise agreed.

Working Hours in Spain

Working hours are regulated by Spanish law, which also covers rest time, annual leave, overtime, vacations, and public holidays. Full-time workers aged over 18 cannot work more than 40 hours a week, averaged over a year, or more than nine hours a day unless a collective bargaining agreement applies.

Overtime cannot exceed 80 hours annually. There must be 12 hours’ rest between the end of one working day and the start of the next. Since May 2019 employers must keep records of employees’ daily hours worked for four years.

Overtime in Spain

Overtime is not obligatory unless stipulated in a collective bargaining agreement or contract. Any work over the maximum allowed normal working hours is considered overtime and cannot exceed 80 hours annually.

Compensation for extra hours can be paid for at a premium or time off given in lieu. Since May 2019 employers must keep records of employees’ daily hours worked for four years.

Notice Periods in Spain

Notice periods are generally written into a collective bargaining agreement or contract. These can be changed if agreed upon by both parties. If there is no agreement according to the Labor Law, whoever is seeking the dissolution of employment must give a minimum of 15 days’ notice prior to termination.

During a trial or probationary period, no statutory notice is needed unless agreed upon prior to employment.

Redundancy and Termination/Severance in Spain

Grounds for individual termination include end of contract for a specific job, resignation, and retirement through permanent illness. Objective dismissals can be based on workers’ incompetence, inability to adapt to technical change, poor attendance and redundancies based on economic, technical, or organizational grounds.

In the event of fair dismissal, legislation requires employees are paid a minimum legal compensation of 20 days’ pay for each year of service, up to a maximum of 12 months’ pay.

In unfair dismissals, an employee on an open-ended contract is paid a minimum legal compensation of 45 days’ pay for each year of service, up to a maximum of 43 months’ pay.

In enterprises of fewer than 25 employees, the Public Fund of Wage Warranty (Fondo de Garantía Salarial) pays 40% of the legal indemnification of employees in collective redundancies.

Pension Plans in Spain

Spain operates a three-pillar pension system comprising a generous state pension and voluntary occupational and private pension arrangements. Spain has a relatively small pension market, dominated by third pillar insurance products.

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