Payroll Services for International Companies in Spain

The total employee cost in Spain for the employer includes the gross salary plus Social Security contributions, which represent approximately 30-31% on top of gross. For an annual gross salary of EUR 50,000, the total employer cost is approximately EUR 65,250. Added to this are items such as collective agreement insurance, mandatory occupational health training, and annual medical check-ups. The maximum contribution base in 2026 is EUR 5,101.20/month (RDL 3/2026), which caps the SS cost for very high salaries. Additionally, a solidarity contribution applies for remuneration exceeding this ceiling.

Spanish law establishes a minimum of 14 annual pay periods: 12 ordinary monthly payments plus 2 extraordinary payments (typically in June and December). The applicable collective agreement may establish additional payments. The extraordinary payments may be pro-rated into 12 monthly instalments if permitted by the collective agreement or agreed with the employee, resulting in 12 larger payments. For Social Security contribution purposes, the extra payments are always pro-rated into the monthly base.

A collective agreement (convenio colectivo) is a negotiated agreement between worker representatives and employers that regulates working conditions for a sector or territory. In Spain, collective agreements set minimum salaries by professional category (normally above the SMI), working hours, additional holidays, permits, salary supplements and hiring conditions. Every subsidiary in Spain must apply the collective agreement corresponding to its main business activity (CNAE code), which directly determines salary costs and working conditions.

Expatriate payroll management in Spain involves: determining tax residency (more than 183 days = resident), evaluating the Beckham Law regime applicability (24% flat rate on the first EUR 600,000), managing shadow payroll if the home-country payroll is maintained, applying tax equalisation to neutralise the fiscal impact, and verifying Social Security coverage (A1 certificate for intra-EU postings or bilateral convention). Euroaccounts manages these processes in coordination with the group’s international mobility team.

Employee registration with Social Security must be completed before the employment relationship begins. The Social Security Treasury allows registration up to 60 days in advance. Non-compliance constitutes a serious infringement punishable with fines of EUR 751 to EUR 7,500 per unregistered worker. Additionally, the company would be liable for all benefits the worker would have been entitled to. Registration is handled electronically through the RED system. The employment contract must be communicated to the SEPE within 10 business days.

Dismissal cost in Spain depends on the type: unfair dismissal generates compensation of 33 days’ salary per year of service, capped at 24 months’ salary (Article 56 Workers’ Statute). Objective dismissal (economic, technical, organisational or production grounds) carries compensation of 20 days per year, capped at 12 months’ salary (Article 53). There is no concept of at-will employment. Fair disciplinary dismissal does not generate compensation. Additionally, the final settlement (finiquito) must include accrued holiday, pro-rata bonus payments and any outstanding salary.

It is not advisable. A foreign company without a permanent establishment in Spain that hires local employees risks the Tax Agency determining it has a de facto PE, with the corresponding tax consequences. The alternative would be to use a temporary Employer of Record (EOR), but for stable operations it is preferable to incorporate a subsidiary or branch. Euroaccounts advises on the most appropriate structure and manages both entity formation and the first employee registration.

Euroaccounts integrates Spanish payroll data with the main global systems: ADP GlobalView, SAP SuccessFactors/HCM, Workday, and others. The process includes mapping Spanish compensation concepts (base salary, supplements, SS, IRPF) to the global system’s format, periodic data upload in the required format (CSV files, API, or import templates), and monthly reconciliation. This enables the parent to have real-time visibility of the Spanish subsidiary’s labour costs within its global reporting system.