Hiring In Spain with an Employer of Record
Employer of Record Spain
An employer of record (EOR) in Spain is a third-party company that becomes the legal employer of your Spanish staff, managing payroll, Seguridad Social contributions, income tax (IRPF) withholding, and employment contracts under Spain’s Workers’ Statute (Estatuto de los Trabajadores) and the applicable collective agreement (convenio colectivo) while you direct the employee’s daily work.
Employer of record services in Spain let any overseas company hire employees in Spain without setting up a Spanish entity (SL). Onboarding through a Spain EOR typically takes 1–2 weeks, compared with 6–12 weeks to incorporate an SL and register with the tax and social-security authorities.
What Is an Employer of Record Service in Spain?
Spain is a popular first step into Europe - a deep, skilled talent pool, strong tech hubs in Madrid and Barcelona, and competitive costs. But its employment framework is protective: pay runs on a 14-payment structure, most roles are governed by a binding collective agreement, and dismissal carries statutory severance. You cannot run Spanish payroll or employ someone in Spain without a registered Spanish entity unless you use an employer of record.
An EOR removes that barrier. It already holds a Spanish entity and becomes the legal employer of your hire issuing a compliant contract, running payroll, registering the employee with Seguridad Social, withholding IRPF income tax, and carrying employer liability while your company directs the employee's actual work.
How Does an Employer of Record Work for US Companies Hiring in Spain?
The model works the same for a US, UK, or Indian company: you select the candidate and set their role and salary; the EOR becomes the legal Spanish employer, handling the contract, Seguridad Social, payroll, and compliance under the Estatuto de los Trabajadores and the relevant convenio colectivo; the employee works for you day-to-day. For US companies, it avoids the cost and delay of a Spanish subsidiary and removes contractor-misclassification risk.
What Is the Difference Between an EOR and a PEO in Spain?
An EOR is the sole legal employer of your Spanish staff and does not require you to have a Spanish entity. A PEO (Professional Employer Organisation) operates a co-employment model and requires the client to already have its own Spanish entity. For an overseas company hiring in Spain without an entity, an EOR is the correct model, a PEO is not.
How to Hire Employees in Spain Using an Employer of Record
What Are the Steps to Employ Remote Workers in Spain Through an EOR?
Choose a Spain EOR provider with its own Spanish entity, Seguridad Social registration, and local payroll capability.
Sign the client service agreement – defining scope, fees, headcount, and liability allocation.
Share the offer details – gross salary in euros (confirm x14 or x12 basis), job title, start date, work location, and benefits.
The EOR issues a compliant contract under the Estatuto de los Trabajadores and the applicable convenio colectivo usually a permanent (indefinido) contract.
The employee is onboarded registered with Seguridad Social, with IRPF tax set up; a foreign national needs an NIE and, if non-EU, a work authorisation.
The EOR runs monthly payroll withholding IRPF, deducting employee social security, paying the employer’s ~31% contribution, and issuing compliant payslips (nóminas).
Ongoing HR and compliance – payslips, leave, the two extra payments (pagas extraordinarias), contract changes, and compliant offboarding (finiquito).
How Fast Can You Onboard an Employee in Spain with an EOR?
Onboarding a Spanish employee through an EOR typically takes 1–2 weeks from a signed offer to the first day covering the employment contract, Seguridad Social registration, and payroll setup.
A non-EU national needing a work visa will take longer. By comparison, incorporating a Spanish SL and registering it for payroll usually takes 6–12 weeks before you can legally pay your first employee.
What Are the Benefits of Using an EOR in Spain for Startups?
- Hire your first Spanish employee in days, without EUR 3,000-8,000+ of entity setup cost or EUR 3,000 in share capital.
- No Spanish accounting, Seguridad Social, or payroll function to build in-house.
- Correct application of the convenio colectivo - the binding sector agreement that sets pay, leave, and notice above the statutory floor.
- Test the Spanish market with one hire, then scale or exit cleanly without winding down a company.
What Legal Risks Does an EOR Mitigate in Spain?
Worker misclassification – Treating a Spanish worker as a contractor when the relationship is really employment carries back-payment and penalties. The EOR classifies and employs correctly.
Convenio compliance – The wrong collective agreement means wrong pay, leave, or notice. The EOR applies the correct one.
Payroll and social security – Seguridad Social, IRPF, FOGASA, and MEI must all be calculated and filed correctly. The EOR handles it.
Termination – Spain requires a valid cause and pays statutory severance. The EOR manages the process and the finiquito.
How Long Can You Use an EOR in Spain Before You Need an Entity?
There is no fixed legal time limit, but using an EOR for a large, permanent, core-function team over many years can raise permanent-establishment and misclassification questions. A responsible EOR advises on when converting to your own SL makes more sense usually once Spanish headcount is stable above roughly 15 employees. PamGro flags this proactively rather than leaving it unsaid.
Employer of Record vs. Setting Up a Legal Entity in Spain
The two routes to legally employing someone in Spain are using an EOR and incorporating your own Sociedad Limitada (SL). Here is a direct comparison:
Factor | Employer of Record (EOR) | Spanish Entity (SL) |
|---|---|---|
Setup time | 1–2 weeks | 6–12 weeks (NIE, notary, tax & Seguridad Social) |
Setup cost | EUR 0 registration cost | EUR 3,000-8,000+ plus EUR 3,000 minimum capital |
Compliance burden | Managed entirely by the EOR | You manage Seguridad Social, IRPF, convenio, filings |
Employment liability | Held by the EOR | Held by the entity and its administrator |
Time to first hire | 1–2 weeks | 2–3 months |
Exit / wind-down | End the service agreement | Formal dissolution (months; costly) |
Best for | 1–15 employees; market entry | 15+ employees; permanent Spanish base |
Pros of an EOR: fast, no entity cost, Spanish compliance handled, easy to exit ideal for testing the market.
Cons of an EOR: a per-employee fee is less cost-efficient at high headcount, and you have less direct control over HR than a wholly owned entity.
When an entity wins: once you pass roughly 15 Spanish employees or commit to a permanent base, an SL usually becomes more cost-effective.
How Much Does an EOR in Spain Cost?
What Pricing Models Do Spain EOR Providers Use?
Pricing Model | Typical Range | Best For |
|---|---|---|
Flat monthly fee per employee | EUR 400–700 / employee / month | Predictable budgeting; higher salaries |
Percentage of gross salary | 8–15% of gross salary | Lower-salary roles |
The EOR fee is separate from the cost of employment itself. On top of gross salary, a Spanish employer pays social security contributions of roughly 31% of gross salary (common contingencies, unemployment, MEI, and FOGASA), and salary is paid across 14 instalments a year. The EOR fee covers the administration of all of it.
What's Included in a Spain EOR Fee?
- Compliant contract drafting under the Estatuto de los Trabajadores and convenio colectivo
- Monthly payroll (nóminas) across the 14-payment structure
- IRPF withholding and Seguridad Social registration and contributions
- Statutory leave and benefits administration
- Onboarding and compliant offboarding, including finiquito calculation
What Legal Compliance Does an EOR Handle for Spanish Employees?
Can an Employer of Record Handle Payroll and Taxes in Spain?
Yes. A Spain EOR runs full payroll and tax: it withholds IRPF income tax, deducts employee social security (~6.4%), pays the employer’s social security contribution (~31%), issues compliant payslips (nóminas), and remits everything to the Agencia Tributaria and Seguridad Social. It also manages the two extra annual payments (pagas extraordinarias). The client never registers with Spanish authorities directly.
What Are the Tax Implications for US Companies Using an EOR in Spain?
Because the EOR is the legal Spanish employer, the US company usually avoids creating a taxable permanent establishment (PE) in Spain for routine hiring, a key reason US companies choose the model and the employee’s IRPF and social security are handled locally. But a large, long-term, revenue-generating team can still raise PE questions, so companies planning a permanent Spanish operation should take tax advice on when to establish their own entity.
How to Switch to an Employer of Record Service in Spain?
Switching to an EOR or between providers is straightforward: notify the current provider per the notice period; the new EOR issues fresh contracts and transfers the Seguridad Social registration; payroll moves across from the next cycle. Because pay and role continue unchanged, a well-managed switch has no gap in employment or benefits, typically within 2–4 weeks.
Spain Employment Law & Compliance Guide (2026)
Spanish employment is governed by the Estatuto de los Trabajadores and, for most roles, a binding convenio colectivo that can improve on the statutory floor. The figures below are verified for 2026.
What Must a Spanish Employment Contract Include? (Indefinido vs Temporal)
The default and most common contract is the contrato indefinido (permanent). The contrato temporal (fixed-term) is now restricted to specific, justified circumstances after Spain’s labour reform curtailed its use. A compliant contract states the job and category under the convenio, gross salary, working hours, probation, and the applicable collective agreement. (Source: Estatuto de los Trabajadores.)
What Are Spanish Statutory Leave Entitlements?
Leave Type | Entitlement (2026) | Notes |
|---|---|---|
Annual paid leave | 30 calendar days (22 working days) minimum | Convenio colectivo may grant more |
Public holidays | 14 per year | National + regional + local |
Maternity / paternity leave | 16 weeks each, fully paid | Paid by Seguridad Social; equal for both parents |
Sick leave | Paid via Seguridad Social after a short waiting period | Employer/convenio often tops up |
How Does an EOR Handle Spanish Payroll and Taxes? (IRPF & Seguridad Social)
Contribution / Tax | Approximate 2026 Rate | Paid By |
|---|---|---|
Employer social security | ~30.6-32.2% of gross salary | Employer |
Employee social security | ~6.35-6.47% of gross salary | Employee |
Income tax (IRPF) | Progressive; withheld at source | Employee |
MEI (Intergenerational Equity) | 0.8% total (employer + employee share) | Both |
FOGASA (Wage Guarantee Fund) | 0.20% of salary | Employer |
What Work Permits and Visas Apply to Hiring in Spain?
EU/EEA and Swiss nationals need no work permit and simply require an NIE (foreigner identity number). Non-EU nationals need a work and residence authorisation before starting common routes include the highly qualified professional permit and Spain’s digital nomad visa. An EOR can employ eligible workers and advise on requirements, but sponsorship for non-EU nationals may need additional steps; confirm before hiring a candidate who needs authorisation.
What Statutory Benefits Are Required in Spain?
Social security (Seguridad Social): mandatory; covers healthcare, pensions, unemployment, and parental leave.
14-payment salary: 12 monthly payments plus two extra payments (pagas extraordinarias), usually in July and December or prorated across 12.
Paid leave: 30 calendar days minimum, plus 14 public holidays.
Convenio benefits: many collective agreements add supplements, bonuses, or extra leave above the statutory minimum.
What Is the Minimum Wage in Spain in 2026?
For 2026, Spain’s minimum wage (SMI) is EUR 1,221 gross per month, paid across 14 instalments – an annual total of EUR 17,094 gross. This is a 3.1% increase over the 2025 level of EUR 1,184. Because Spain pays in 14 instalments, the equivalent prorated figure across 12 months is about EUR 1,424.50. Most professional and tech salaries sit well above the SMI, and the applicable convenio colectivo often sets a higher sector minimum.
What Are Standard Working Hours in Spain?
- The standard maximum is 40 hours per week, averaged over the year; a statutory reduction toward 37.5 hours has been under debate.
- Employees are entitled to a minimum daily rest and at least one and a half days off per week.
- Time-recording of all hours worked is a legal requirement for employers in Spain.
How Does Overtime Work in Spain?
- Overtime is capped at 80 hours per year and is voluntary unless the convenio provides otherwise.
- Overtime is either paid (at a rate no lower than the ordinary hour) or compensated with equivalent rest time, per the convenio.
What Is a Standard Probation Period in Spain?
Probation is set by the convenio colectivo and capped by law commonly up to 2 months for most roles, or up to 6 months for qualified/technical staff. During probation either party may end the contract without severance, but standard statutory protections otherwise apply.
How Does Termination of Employment Work in Spain?
Spain has no at-will employment. Dismissal requires a valid legal cause and pays statutory severance, which comes in two tiers:
Unfair dismissal (despido improcedente): 33 days’ salary per year of service, capped at 24 months (service before 12 February 2012 accrues at the older 45-days/year rate).
Objective / fair dismissal (despido objetivo): 20 days’ salary per year of service, capped at 12 months, with a valid objective cause and 15 days’ notice.
Finiquito: the final settlement — outstanding salary, unused holiday, and any prorated extra payments — is owed on every exit, regardless of type.
Getting the tier or calculation wrong is the costliest mistake foreign employers make in Spain. An EOR runs the process and settlement correctly to reduce the risk of a labour claim. (Source: Estatuto de los Trabajadores.)
How to Onboard Employees in Spain Through an Employer of Record
PamGro’s Spain onboarding moves your hire from signed offer to first day in 1–2 weeks:
Step | What Happens | Owner |
|---|---|---|
1. Agreement & offer details | Client signs the EOR agreement and shares salary, role, and start date | Client + PamGro |
2. Contract issued | PamGro issues a compliant contract under the Estatuto and convenio colectivo | PamGro |
3. Registration | Employee registered with Seguridad Social; NIE/IRPF set up | PamGro |
4. Payroll setup | Employee added to the 14-payment payroll; first cycle scheduled | PamGro |
5. First day | Employee begins work; first nómina issued on the pay run | PamGro + Employee |
How to Terminate Employees in Spain Using an Employer of Record
Spanish termination is high-risk for foreign companies unfamiliar with the two-tier severance system. An EOR manages the full process compliantly:
- Client notifies the EOR of the intent to end the engagement and the reason.
- The EOR advises whether the case supports an objective dismissal or risks being unfair, and on the correct notice and documentation.
- The EOR runs the formal process, including the required written notice under the Estatuto and convenio.
- Severance and the finiquito are calculated — 20 days/year for an objective dismissal, or 33 days/year if unfair, plus accrued pay and holiday.
- Final payroll is processed and the Seguridad Social registration is closed out.
- The EOR issues the required documentation to the departing employee.
How Does Termination of Employment Work in Spain?
Spain has no at-will employment. Dismissal requires a valid legal cause and pays statutory severance, which comes in two tiers:
Unfair dismissal (despido improcedente): 33 days’ salary per year of service, capped at 24 months (service before 12 February 2012 accrues at the older 45-days/year rate).
Objective / fair dismissal (despido objetivo): 20 days’ salary per year of service, capped at 12 months, with a valid objective cause and 15 days’ notice.
Finiquito: the final settlement — outstanding salary, unused holiday, and any prorated extra payments — is owed on every exit, regardless of type.
Getting the tier or calculation wrong is the costliest mistake foreign employers make in Spain. An EOR runs the process and settlement correctly to reduce the risk of a labour claim. (Source: Estatuto de los Trabajadores.)
Why Use PamGro for Employer of Record in Spain
For Spanish hiring specifically, PamGro combines a Spanish entity with the statutory accuracy the market demands: the 14-payment structure, the right convenio colectivo, and correct two-tier severance on exit.
PamGro’s Spain EOR advantage |
We remove the Spain-specific traps: 14-payment payroll, convenio colectivo application, Seguridad Social registration, and two-tier severance. We advise on the long-term-EOR / permanent-establishment question honestly including when converting to your own SL makes more sense. 17 years of EOR experience, 8,500+ contractors employed, and $150M+ in payroll processed to date. EU-UK-India corridor specialists- build teams across all three regions under a single partner.
Get a free Spain EOR quote → pamgro.com/pricing | Talk to a Spain hiring expert → pamgro.com/contact |
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Frequently Asked Questions
1. Who are the top employer of record providers for Spain remote hiring?
Providers offering Spain EOR services include PamGro, Deel, Remote, Skuad, and Teamed. For companies hiring in Spain as part of a wider EU, UK, or India expansion, PamGro specialises in the EU/UK-India corridor, giving a single accountable partner across those markets.
2. Is it necessary to have a local entity to hire employees in Spain?
No. You can hire employees in Spain without a local entity by using an employer of record. The EOR is the legal Spanish employer, so you access Spanish talent without incorporating an SL, registering with Seguridad Social, or building a local payroll function.
Can companies customize employment terms when working with an EOR in Spain?
Yes, within the limits of Spanish law and the applicable convenio colectivo. You set salary, role, benefits, and start date; the EOR ensures the contract meets the statutory floor and the binding collective agreement. Terms cannot fall below what the Estatuto de los Trabajadores or convenio require.
What types of employment can an EOR facilitate in Spain?
An EOR primarily facilitates permanent (indefinido) employment, which is the default in Spain. It can also handle fixed-term (temporal) contracts where a justified legal reason applies, following Spain’s labour reform that restricted temporary contracts. Contractor engagement is separate and carries misclassification risk.
How do leading EOR providers compare for Spanish market entry?
Compare providers on four things: whether they hold their own Spanish entity or resell a partner; how they apply the correct convenio colectivo; whether they get the 14-payment structure and two-tier severance right; and whether they advise on the long-term permanent-establishment question. Global platforms offer breadth, PamGro offers clearer compliance accountability.
Can an employer of record handle payroll and compliance in Spain?
Yes. A Spain EOR withholds IRPF, deducts and pays employee and employer Seguridad Social contributions, issues compliant payslips across the 14-payment cycle, and remits everything to the Agencia Tributaria and Seguridad Social. The client never registers with Spanish authorities directly.