Understanding Payroll in Spain
Managing payroll in Spain involves navigating complex labor, tax, and social security laws. Whether you’re a foreign company hiring local employees or setting up a subsidiary, understanding payroll obligations is crucial for staying compliant.
At Borderless Lawyers, we help foreign businesses set up and manage payroll in full alignment with Spanish law.
📋 Key Components of Spanish Payroll
💰 1. Gross Salary Structure
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Base salary (salario base)
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Bonuses (gratificaciones)
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Overtime pay
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Commissions
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Benefits in kind (e.g., meal vouchers, transport)
📌 Most employees receive 14 payments per year (12 monthly + 2 extra bonuses in summer and Christmas).
📊 2. Social Security Contributions
Both employer and employee must contribute:
| Party | Contribution % (approx.) | Covers |
|---|---|---|
| Employer | ~30% of gross salary | Pensions, healthcare, unemployment, training |
| Employee | ~6.35% of gross salary | Same, deducted from salary |
🧾 Registration with Tesorería General de la Seguridad Social (TGSS) is mandatory before making contributions.
🧾 3. Income Tax Withholding (IRPF)
Employers are required to deduct Personal Income Tax (IRPF) from salaries:
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Rate depends on salary, contract type, and family status
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Typically ranges from 2% to 45%
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Submitted monthly to the Tax Agency (Agencia Tributaria / AEAT)
📌 Accurate calculation is key to avoiding penalties during audits.
🧑💼 4. Employment Contracts
Payroll must reflect contract terms, which include:
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Gross salary
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Working hours
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Vacation entitlements (30 calendar days/year)
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Collective bargaining agreements (CBAs) where applicable
📄 All employees must have a written employment contract in Spanish.
📅 5. Payslips (Nóminas)
Employers must issue a monthly payslip showing:
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Gross and net pay
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IRPF deduction
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Social security contributions
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Extra payments and benefits
Payslips must be delivered in a legal and verifiable format (paper or digital).
🛠️ Payroll Process in Spain: Step-by-Step
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Register with Spanish Tax and Social Security Authorities
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Sign compliant employment contracts
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Calculate gross and net salaries (IRPF & contributions)
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Submit social security and tax withholdings monthly
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Deliver payslips and pay employees
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File annual summaries with tax office
⚖️ Penalties for Non-Compliance
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Late payments to social security → Fines up to 20%
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Inaccurate IRPF filings → Tax audits and backdated interest
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No payslips or contracts → Labor inspection sanctions
✅ Our team ensures your payroll meets legal standards and union rules.
🌍 Foreign Companies: Hiring in Spain
Foreign companies can manage payroll via:
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Hiring via a Spanish subsidiary
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Using an Employer of Record (EOR)
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Outsourcing to a local payroll provider
We help you choose the best option based on your business goals.
📞 Payroll Compliance Made Simple
Whether you’re a startup hiring your first Spanish employee or a multinational expanding your team, Borderless Lawyers offers:
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📄 Payroll setup & registration
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🔍 IRPF and social security calculation
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📑 Payslip generation
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👨⚖️ Legal contract drafting and HR compliance
📍 Real-World Example
Case: A Canadian tech company hired five remote Spanish developers. We structured compliant employment contracts, managed payroll remotely, and ensured full tax and social security filings.
🚀 Get Expert Payroll Support in Spain
Ensure your payroll process is accurate, legal, and employee-friendly.
Contact Borderless Lawyers today to streamline your payroll operations in Spain.