EMPLOYER OF RECORD IN SPAIN

Spain is a highly strategic location for international business as it holds longstanding trade partnerships with the European, Middle Eastern, and Northern African markets and trade ties to Latin America. Spain receives praise as a strong base to conduct business in Europe, the Middle East, Northern Africa, and Latin America due to nearly two dozen trade agreements that provide reciprocal protection, promotion of foreign investments, and avoidance of double taxation.

The Spanish government supports free trade and investment by relaxing business regulations and increasing incentives to attract foreign businesses and investment. Spain’s restructured financial sector, robust tourist economy, efficient transport network, focus on renewable energies, and numerous multinational companies are substantial motivators for international business development.

Spain has tackled a range of reforms, including giving more autonomy to local regions, diversifying the national economy, improving employment conditions, enhancing social welfare programs, and investing in national research and development.

Spain’s tech and innovation industry holds some of the country’s best business opportunities. The region of Catalonia represents a significant contender of this thriving ecosystem within Spain’s economy. Barcelona is referred to as the country’s startup capital as it’s home to a limitless number of tech leaders.

Benefits

The Spanish government supports free trade and investment by relaxing business regulations and increasing incentives to attract foreign businesses and investment.

When an employment contract’s duration is more than four weeks, an employer must provide the employee with the following information in writing within two months from the commencement of employment:

• Identification of employer and employee
• Employment commencement date and duration of employment for temporary contracts
• Location of business
• Professional group or category
• Base salary, compensation, and benefits, if any
• Total working hours
• Total number of holidays
• Notice periods
• Applicable collecting bargaining agreement

The current minimum monthly wage in Spain is EUR1,166 for 2022.

The following tax rates set by the Spanish government apply in 2022. However, each region in Spain may set its own rates. There is a dual system: the state tax and the regional tax.

• For €0—€12,450, state tax is 9.5% and regional tax is 9.5%, totaling 19%
• For €12,450—€20,200, state tax is 12% and regional tax is 12%, totaling 24%
• For €20,200—€35,200, state tax is 15% and regional tax is 15%, totaling 30%
• For €35,200—€60,000, state tax is 18.5% and regional tax is 18.5%, totaling 37%
• For €60,000—€300,000, state tax is 22.5% and regional tax is 22.5%, totaling 45%
• For €300,000+—state tax is 23.5% and regional tax is 23.5%, totaling 47%

The corporate income tax rate in Spain is 25%.

Contributions for social security insurance are calculated on the basis of an employee’s monthly wage. As of 2022, Spain’s current social security rate charged on income for employers is 29.9% of the employee’s net taxable income; the employee pays 6.35%, which is deducted from the employee’s salary.

In Spain, employees are entitled to a minimum of 30 days of paid leave per year. An employment contract or collective bargaining agreement can increase an employee’s annual paid leave.

An employer of record (EOR) in Spain is a third-party organization that becomes the full legal employer of your in-country workforce. An employer of record (EOR) in Spain compliantly handles employer-related responsibilities like onboarding, pay, and benefits while enabling you to continue managing the day-to-day operations of your team.