Setting up and managing a payroll in Spain
The large Southern European country of Spain has a rich culture, world-famous quality of life, and a developed economy, all of which add to it being an attractive destination for business expansion.
One of the first things your organization will need to do is start hiring a workforce in Spain, and this generally means you’ll have to establish a legal entity in the country, set up a payroll, and jump through other administrative hurdles. Collectively, these processes can take weeks, potentially delaying your expansion efforts and costing you in lost revenues.
A popular solution to this problem is to manage your Spanish payroll outsourcing setup to a specialist Spanish PEO. At Horizons, we are experts in helping organizations expand into Spain as smoothly as possible. We’ll handle your payroll setup and management, whether or not you have an established presence in the country already.
Why choose the Horizons payroll solution?
If you have an entity
If your company already has a legal entity registered in Spain then we can help you with the next steps. Our team will set up and manage your payroll, as well as any associated HR and compliance work to help you focus on the important job of expanding your business in Spain.
If you don’t have an entity
If you don’t yet have a registered entity in Spain, then we can provide a more comprehensive service option to get you up and running in the country. We can offer the use of our subsidiary in Spain to act as the employer of record for your hires so you don’t have to establish a legal entity yourself, saving you time.
Additionally, we will set up and run your Spain payroll, handle any HR, compliance, and take care of all other associated work to ensure you can expand seamlessly into Spain.
Spain payroll guide
What are the withholdings and tax regulations in Spain?
Spanish workers are taxed progressively, so employees with greater incomes need to pay higher taxes than lower earners. The income tax rate is between 19% and 45%.
The corporate tax rate is 25%, but some companies may be liable for additional taxes depending on their specific situation. There are both national and municipal-level taxes that may be due.
Employers must contribute towards social insurance schemes, and these contributions total roughly 30% of each employee’s salary, with an upper limit of slightly above €3,500.
Employee entitlements and terminations in Spain
When employees on open-term contracts are terminated in Spain, a severance payment of around one month’s wages per year of employment is generally due. An additional month of salary may also be paid upon termination, but is not legally required.
These rules do not usually apply for employees in a probation period, which is generally two month, but can be more for certain roles.
Workers may choose to take legal action if they think they have been treated unfairly, so it is always important to keep terms clear and thorough in a formal contract of employment for every employee.
How to establish Spain payroll outsourcing
Setting up a payroll in Spain is a complex process, and you will need to deal with language, cultural, and procedural differences if you want to set it up yourself. You will need to first register an entity in Spain, then register with the appropriate tax authorities, and so on.
These initial processes can take weeks or months to finish, which could significantly stall your expansion progress.
Horizons can help you to avoid this lengthy and complicated process, providing comprehensive payroll setup and management services for Spain. Our experts will handle your Spanish HR, compliance work, and taxes, and we can offer our Spanish subsidiary to work as your employer of record if you don’t have an established entity in the country. Working to Horizons can drastically simplify your entire Spain payroll outsourcing process and hiring timeline, setting you up for a successful expansion into Spain.
Manage payroll in Spain
Whether it’s EOR service or just payroll management, Horizons’ employment experts can help you get started in 24h.