Payroll in Spain: what you need to know as an entrepreneur

After setting up a business in Spain, many entrepreneurs will start thinking about expanding their staff. In this article, we will try to offer entrepreneurs several tips in terms of payroll. In Spain, companies need to issue payrolls for their employees (usually on a monthly basis). It’s crucial for both employees and companies, to understand the different parts of a payroll.

 

1. Be aware of the possible changes in payroll regulation

2. Keep a correct record of the workers’ payroll

3. Make social security contributions and pay taxes

4. Clarify the salary correctly

5. Adeslas wants to support you with starting a new business!

 

 

1. Be aware of the possible changes in payroll regulation

 

Companies are usually obliged to keep up with the changes in Spanish worker status law and Spanish social security law, as well as new updates on the website of the Ministry of Social Security. These laws include the general requirements for hiring employees such as:

 

• Minimum salary: In 2021, the minimum wage is €1108.3 if the company pays for 12 months/year, or €950 for 14 payments/year

 

• Extra hours:
  • 40 hours/working day is the general rule for full-time, but each collective agreement establishes its own rules of working hours.
  • There are also options to work part-time
  • Workers are permitted to work a maximum of 80 hours of overtime per year, and this is subject to specific social security contributions.

 

• Numbers of payments:
  • Employers generally pay their workers’ gross annual salary in 12, 14, or 16 installments. The most common option is 14 payments, whereby the annual salary is divided into 12 monthly payments plus two additional payments.
  • If employees prefer to divide their salary into 12 payments, they must sign a declaration to this effect.

 

• Annual holidays
  • Workers are entitled to a holiday of a minimum of 22 working days/year, equal to 30 calendar days
  • Besides, they will have 14 holidays each year as determined by the calendar (bank holidays), which are 10 national holidays, 2 regional holidays, and 2 local holidays.

 

• Paid and unpaid leave: Although not all expenses of the following types of leaves are borne by the company, it’s still important to notice that might occur extra costs to the company due to the employee’s absence.
  • Sick leave:
    • If an employee is sick from 4 to 20 days, and you receive the medical certificate within three days. You need to apply for sick leave for the employee on the social security website and will pay the cost of the first 15 days of the allowance. After that, Social Security will bear the costs.
  • Other types of leave without affecting their salary:
    • 15 days’ holiday when getting married
    • 2-4 days upon the death of a relative
    • 16 weeks of maternity, paternity leave

 

• the type of employment contract

 

If the payroll regulations change, companies need to follow the newest regulations and fulfill the new requirements.

 

2. Keep a correct record of the workers’ payroll

 

 

Companies need to keep a correct record of their workers’ payrolls because these records are the company’s accounting documents and prove that their employees are treated properly and paid fairly for their work.

 

 

3. Make social security contributions and pay taxes

 

In Spain, both companies and workers need to make contributions to Social Security General Treasury (TGSS). As explained here, we understand that workers need to make their part of the contribution by contributing part of their salary. There, companies also need to make contributions to social security by paying:

 

• The contribution share and taxes of the company itself
• The contribution and taxes of the workers because these contributions are set aside to cover the costs of healthcare, pensions on retirement, accidents in the workplace, and unemployment benefits, among other things.

 

 

4. Clarify the salary correctly

 

Most companies prefer to talk in gross numbers while some companies prefer to talk in net numbers.  Gross numbers are often attractive to candidates while talking in net numbers makes the company seem quite sincere. Our suggestion for you is:

 

• No matter which number you prefer to talk about, you should clarify it the first time.
• Be consistent about what you say to avoid any suspicion or confusion.

 

 

5. Adeslas wants to support you with starting a new business!

 

Setting up a new business takes courage, intelligence, and a good choice! Here at Adeslas, we want to offer businesses the best business insurance. If you are an expat thinking about starting a business in Spain, we also offer our expat insurance which fulfills all visa, NIE/TIE requirements. We protect your business, and we also protect you!

 

If you would like to know more about this topic, check out one of the blogs listed below:

• How to apply for the student NIE/TIE in Spain for the first time?
• Guide to the use of online banks in Spain
• Guide on how to open a bank account in Spain
• Guide to understand Spanish paychecks
• Guide to the income tax statement in Spain
• Guide on how to open a business in Spain

 

 

Reference:

 

[1] BOE.es - BOE-A-2015-11724 Real Decreto Legislativo 8/2015, de 30 de octubre, por el que se aprueba el texto refundido de la Ley General de la Seguridad Social. (2021). Retrieved 9 September 2021, from https://www.boe.es/diario_boe/txt.php?id=BOE-A-2015-11724 

[2] BOE.es - BOE-A-2015-11724 Real Decreto Legislativo 8/2015, de 30 de octubre, por el que se aprueba el texto refundido de la Ley General de la Seguridad Social. (2021). Retrieved 9 September 2021, from https://www.boe.es/diario_boe/txt.php?id=BOE-A-2015-11724 

[3] Spain - Place Explorer - Data Commons. (2021). Retrieved 9 September 2021, from https://datacommons.org/place/country/ESP?utm_medium=explore&mprop=minimumWage&hl=en

[4] año, E. (2021). SMI de España 2021. Retrieved 9 September 2021, from https://datosmacro.expansion.com/smi/espana 

[5] Spain - Employment, Social Affairs & Inclusion - European Commission. (2021). Retrieved 9 September 2021, from https://ec.europa.eu/social/main.jsp?catId=1129&intPageId=4792&langId=en A-2015-11724  Accessed 7 Sept 2021.

 

Our content will be updated according to the most recent legislation. Last update: 09/09/2021