Spain is an attractive business destination for multi-national organizations, with the Spanish Government offering many incentives to encourage foreign investment. There are many considerations before you start a business or begin hiring in Spain including payroll, HR, and statutory requirements.
Payroll in Spain
- The minimum wage in Spain is EUR 31.66 per day or EUR 950 per month for industry, agriculture, and service workers
- Employment contracts can be oral or in writing, but the employer must inform the employee of essential contract terms such as working hours and performance reviews
- Employees cannot work more than 40 hours a week or more than 9 hours per day (annual average)
- There is a progressive income tax from 9.5-22.5%
- Non-residents must pay a 24% tax on all income earned in Spain
- People under 16 are prohibited from working, and any breach of this rule is considered a serious offense
HR and Statutory Requirements
- Annual paid leave is set by a mutual agreement in accordance with any collective agreements. Annual leave cannot be less than 30 calendar days or 22 business days
- The maximum sick leave is 12 months
- The current retirement age limit is 65 years. Employees who have reached this age and made social security contributions for at least 15 years are eligible for old-age pension
- Female employees are entitled to 16 weeks maternity leave, plus 2 additional weeks in the case of multiple births
- Fathers are now entitled to 16 week paid paternity leave. This can be taken on a full or part-time basis at a minimum of 50% pay of regular working time
Holidays in Spain
- January 1 – New Year’s Day
- January 6 – Epiphany
- April 15 – Good Friday
- May 1 – Labor Day / May Day
- May 2 – Labor Day observed
- August 15 – Assumption of Mary
- October 12 – Hispanic Day
- December 8 – Immaculate Conception
- December 25 – Christmas Day
Labor regulations are ruled by general legislation (Estatuto de los Trabajadores) (Convenios colectivos). These agreements have a big impact not only on labor standards, but also on the structure of the Spanish payroll. Each job category is regulated by specific Collective Agreements, with a specific salary range per industry, monthly/weekly working hours, vacation days per year.
Spanish Payroll Terms:
Agencia Tributaria – The Tax Agency, public law organization attached to the former Ministry of Economy and Treasury through the former State Secretariat for Finance and Budget, it has its own legal regulation different from that of the General Administration of the State.
Certificado Renta – Income Tax Certificate provided by Tax Agency of Spain (Agencia Tributaria).
CIF – Tax ID certificate for companies (Certificado de Identificación Fiscal). The number is formed from a letter followed by 8 digits.
Cret@ – is the new Direct Settlement System, created to simplify compliance with social security obligations, making the settlement and calculation of social security contributions easier and faster. The new method will replace the current system of self-assessment and is similar to the drafts of income tax that AEAT sends to the tax payers.
NIF – Tax Identification Number for individuals (Número de Identificación Fiscal). This is the generic term for the tax ID number for all individuals. For Spaniards, it’s the DNI plus one letter; for foreigners, it is your NIE.
SEPE – stands for Spanish National Public Employment Service.
Sistema Delt@ – Electronic Filing System of Work Accidents.
Sistema RED – online Social Security transmission system for registering any relevant events with the Social Security, such as: Joiners Leavers, Working Time, Absences, Unpaid Leaves, Changes of categories etc. The system includes SILTRA, recent updated system for Social Security Contributions Settlement.
Sistema Red Directo – RED Direct is a the current transmission mode within the RED that is intended to help small and medium-sized companies meet their obligations with the Social Security over the Internet, using a real time, direct connection to the TGSS .
SMAC -Mediation, Arbitration and Reconciliation Service (Servicio de Mediación, Arbitraje y Conciliación)
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