Spain is known for its vibrant culture and history, but it's also a great gateway to the EU market. As you build your team in Spain, understanding payroll is vital. However, the country's labor market and payroll regulations can derail your market entry. 

Instead of navigating this complexity alone, G-P has a streamlined solution for all your employment needs. This guide outlines considerations for managing payroll in Spain.

How to set up payroll in Spain

Consulting with an expert payroll provider in Spain can help you ensure compliance with local regulations. Before you can hire and pay employees in Spain, you  first need a legal presence in the country, which typically means establishing a subsidiary. This process involves registering with the Spanish Tax Agency (Agencia Tributaria) and the General Social Security Treasury (Tesorería General de la Seguridad Social – TGSS).

Once registered, you must collect specific information from each employee to process payroll, including:

  • Full legal name, address, and date of birth

  • Tax Identification Number (Número de Identificación Fiscal – NIF) for Spanish citizens or Foreigner's Identity Number (Número de Identidad de Extranjero – NIE) for non-citizens

  • Social Security number

  • Spanish bank account details

  • Personal data for income tax withholding purposes (marital status, dependents, etc.) via Form 145 (Modelo 145)

A simpler alternative is to partner with an employer of record (EOR) like G-P. With us, you don’t have  to set up a local entity. We ensure full compliance with all payroll and employment obligations.

Payroll taxes and social security in Spain

Payroll in Spain involves significant deductions for both income tax and social security contributions, which are withheld directly from an employee's payroll.

Spain personal income tax (IRPF)

Spain applies a progressive Personal Income Tax (Impuesto sobre la Renta de las Personas Físicas – IRPF) to employee earnings. Rates are divided between the state and autonomous regions, leading to minor variations. The national progressive tax brackets for 2025 are:

  • 最高 12,450 歐元： 19%

  • 歐元12,450至歐元20,199：24%

  • 歐元20,200至歐元35,199：30%

  • 歐元35,200至歐元59,999：37%

  • 歐元60,000至歐元299,999：45%

  • 300,000 歐元以上： 47%

Spain social security contributions

Both employers and employees make monthly contributions to the social security system. These funds cover pensions, unemployment benefits, parental leave, and Spain’s healthcare benefits. Employers must ensure that all contributions are calculated correctly to comply with Spain's payroll guidelines. Contributions are calculated on a salary base between a legal minimum and maximum, which is updated annually.

  • Spain employer contribution: Approximately 31.10% of an employee's contribution base. This includes payments for common contingencies (23.6%), unemployment (5.5%), professional training (0.6%), and the wage guarantee fund (FOGASA, 0.2%), plus a variable rate for occupational accidents.

  • Spain employee contribution: Approximately 6.45% of an employee’s contribution base. This includes payments for common contingencies (4.8%), unemployment (1.55%), and professional training (0.10%).

Other Spain business taxes

Companies operating in Spain are also subject to a standard corporate income tax rate of 25% and a value-added tax (VAT) of 21%.

Elements of payroll administration in Spain

  • Payment frequency: Salaries must be paid on a punctual, monthly basis.

  • 13th- and 14th-month salary: By law or under most Collective Bargaining Agreements (CBAs), employees are entitled to two extra salary payments (pagas extraordinarias) per year, typically paid in July and December. These can also be paid prorated within the 12 monthly payments. Learn more about 13th-month pay by country.

  • Payslip requirements: Employers must provide each employee with a detailed payslip (nómina) that follows an official model. It should clearly itemize gross earnings, all deductions for IRPF and social security, and the final net pay.

  • Reporting and deadlines: Employers must report and remit withheld taxes and social security contributions to the authorities on a monthly or quarterly basis using specific forms (e.g., Modelo 111 for IRPF, RLC/RNT files for social security) and provide annual summaries (e.g., Modelo 190).

公司的西班牙薪資選項

Companies expanding into Spain have three main options for managing payroll:

  • Internal payroll: A company with a registered subsidiary in Spain and a large HR team can manage payroll internally. This approach requires hiring staff with expertise in Spanish labor and tax law and is often best suited for large organizations with a long-term commitment to the country.

  • 與名義雇主 （EOR） 合作： 與名義雇主合作 G-P 是最有效率且最安全的選項。 作為名義雇主， G-P 處理所有薪資、稅務和合規義務，使您能夠專注於發展您的業務。

  • G-P Contractor™: Although independent contractors aren’t part of payroll, some companies rely on this worker type for specialized projects. With G-P Contractor, you can  hire and pay contractors in 190 countries and your choice of currency, using a digital wallet, bank transfer, or virtual card.

Paying independent contractors in Spain

Spain independent contractors are responsible for registering with the Spanish Tax Agency and the Social Security system under the Special Regime for Self-Employed Workers (RETA) before starting their activity. They must issue formal invoices for their services and are required to file quarterly income tax returns. Social security contributions for autónomos are based on their actual net income, with the option to adjust the contribution base multiple times per year.

When engaging independent contractors in Spain, remember that the legal and tax obligations differ significantly from those for employees. Independent contractors are self-employed and are responsible for their own tax filings and social security contributions.

Spain entitlement and termination terms

Labor laws in Spain are protective of employees. A legally compliant employment contract should outline all terms, including those for termination. Dismissing an employee is highly regulated. If a termination is deemed unfair by a court, the employer must either reinstate the employee or pay severance. 

For contracts signed after Feb. 12, 2012, this severance is calculated as 33 days' salary per year of service, capped at 24 months' salary.

Streamline your Spain payroll with G-P

G-P 是所有頂尖產業分析師評為第一的名義雇主。 我們在 180 多個國家/地區為您的團隊管理整個員工生命週期，包括薪資發放。 按幾下滑鼠，就能準時獲得無錯誤薪資單 ，並彈性付款選項，輕鬆新增紅利、佣金和例外。 

G-P 名義雇主 是領導 HCM、PEO 和薪資發放平台的首選合作夥伴。 將您的勞動力資料集中在一個地方，以維護現有的工作流程，同時確保整合系統的資料一致且準確。

Book a demo to learn more about our global employment products and EOR solutions in Spain.