Independent Contractor Guidelines in Spain

Independent contractors in Spain work more independently than employees and are responsible for their taxes and social security as self-employed workers, known as autónomos. They are typically hired for specific projects or deliverables. Contracts should be clearly outcome-based and not structured as regular employment to avoid misclassification.

How independent contracting is regulated

Independent contracting in Spain is not governed by the same labour protections as employment but is instead regulated through commercial contracts and tax obligations. Contractors must register as self-employed (autónomos) and handle their own income tax and social security contributions. They do not receive statutory employee benefits such as paid leave, healthcare coverage through the employer, or severance.

Employers must ensure contractor agreements do not resemble employment contracts. If the contractor is subject to control, regular pay, or integration into the company, the arrangement may be reclassified as employment.

What makes someone an employee?

In Spain, the legal distinction between an employee and a contractor is based on the substance of the relationship rather than the contract label. Courts look at factors such as:

Key factors include:

• Control and supervision: Whether the company directs how, when, and where the work is performed
• Integration: Whether the individual is embedded in the company’s organisation and workflows
• Provision of tools/equipment: Who supplies the resources needed to perform the work
• Regular pay: Whether payment is made on a fixed salary basis rather than per project or deliverable
• Subordination: Whether the individual works under the employer’s authority and rules

If these factors are present, the worker is likely to be considered an employee rather than a contractor.

Employee vs contractor

The key differences between an employee and an independent contractor in Spain include:

• Control: Employees work under direction and are integrated into the organisation. Contractors retain independence over how and when they deliver results.
• Benefits: Employees are entitled to statutory benefits such as social security coverage, paid leave, maternity and paternity leave, and severance. Contractors are not entitled to these benefits.
• Tax and social security: Employees’ contributions are withheld and remitted by the employer. Contractors must register as autónomos, invoice for services, and pay their own taxes and contributions.
• Continuity: Employees usually have ongoing, long-term roles, while contractors are engaged for specific projects or temporary assignments.

Correct classification is essential in Spain, as misclassifying an employee as a contractor can result in liability for back wages, missed statutory contributions, tax penalties, and fines from labour authorities.

Independent contractor contract length allowance

There is no statutory maximum duration for independent contractor agreements in Spain. However, prolonged or repeated use of contractors for roles resembling permanent employment may trigger reclassification to employee status. Contracts should clearly define the scope, deliverables, and independence of the contractor.

Fixed-term employment contract limitation

Fixed-term employment contracts are distinct from contractor agreements. In Spain, they are strictly regulated and may not exceed 6 months, except in certain circumstances where they can extend up to 12 months. All fixed-term contracts must be justified by objective reasons; otherwise, they risk being converted into permanent employment contracts.

Penalties for Misclassification in Spain

Misclassifying employees as independent contractors can lead to serious liabilities for employers. Penalties include:

• Back payment of wages, benefits, and severance
• Retroactive social security contributions and taxes
• Compensation for employment rights denied
• Fines ranging from €3,126 to over €10,000 per worker
• In extreme cases, potential criminal charges

Correct classification is critical, as Spanish law prioritises the actual working relationship over the terms of the contract.

Employer Contributions in Spain

Employers in Spain contribute approximately 32.5% of an employee’s gross salary to the Social Security Treasury (Tesorería General de la Seguridad Social – TGSS). These contributions cover healthcare, pensions, unemployment, disability, training, and other protections.

The maximum monthly contribution base in 2025 is €4,909.50.

Employee Contributions in Spain

Employees contribute 6.48% of gross salary to Social Security contributions made to TGSS, in addition to paying income tax (IRPF). Their contributions are withheld directly from wages and remitted by the employer.

Income tax

Employment income is subject to Personal Income Tax (IRPF – Impuesto sobre la Renta de las Personas Físicas). This is a progressive system, with both state and regional rates, where the tax rate increases as taxable income rises.

Each autonomous community sets its own regional rates, so the total rate varies by place of residence.

The employer must apply monthly withholdings, calculated according to annual gross salary, contract duration, and the employee’s personal and family situation (marital status, children, dependants, disability, etc). Withholdings are advance payments credited against the annual income tax return.

Employee Social Security contribution breakdown

Tax rebates

• Low-income rebate: This rebate is available for individuals earning under €14,000, phased out at €21,000.
• Family and dependent rebates: Additional allowances for children, dependants, and disability.

Tax thresholds

• No income tax is due if annual earnings are below €5,500.

Mandatory Benefits in Spain

Spain provides a comprehensive framework of statutory benefits through its Social Security system. These benefits ensure access to healthcare, pensions, unemployment protection, parental leave and other core entitlements.

Employers are legally required to make contributions, and employees enjoy broad protections under the Workers’ Statute and collective bargaining agreements.

Social Security coverage

Funded by mandatory employer and employee contributions, Spain’s Social Security system guarantees universal healthcare, pensions, disability and unemployment benefits.

Paid annual leave and holidays

Employees are entitled to a minimum of 30 calendar days of paid leave per year (equivalent to 22 working days). In addition, there are up to 14 public holidays annually, set at national, regional and local levels.

Sick leave

Employees receive paid sick leave beginning on day 4 of absence. From days 4 to 20, they are entitled to 60% of their base salary, and from day 21 onwards, this rises to 75%. Social Security assumes responsibility for payment from day 16.

Parental leave

Both maternity and paternity leave provide 16 weeks fully paid by Social Security, ensuring equal treatment for both parents. This entitlement can be extended in cases of multiple births or complications.

Non-Mandatory Benefits in Spain

Beyond statutory requirements, employers in Spain often offer additional benefits to attract and retain talent. These vary by sector and collective agreement.

Private health insurance

Many employers provide supplementary private health insurance, complementing the universal public healthcare system.

Meal vouchers or subsidies

A common perk in Spain, often provided tax-free up to €11 per day.

Transport allowance

Particularly common in urban areas to offset commuting costs.

Pension or savings schemes

Some employers offer additional retirement savings plans beyond the statutory system.

Professional development

Support for training and upskilling is increasingly offered as part of competitive packages.

Flexible working arrangements

Employers may provide equipment, allowances or flexibility for remote work, in line with Spain’s remote work regulations.

General Employee Rights in Spain

Employees in Spain are protected under the Workers’ Statute, which guarantees fair pay, safe working conditions, paid leave, and protection from unfair dismissal.

Right to fair pay

Employees must receive wages at least once a month, clearly itemised on payslips. Minimum wage levels are set nationally, with additional terms regulated by collective bargaining agreements.

Right to form unions

Employees are free to join trade unions and participate in industrial action, including strikes, without facing retaliation.

Fair dismissal

Spain does not have an “at-will” system. Dismissals must be justified, follow formal procedures, and provide notice. If a dismissal is declared unfair, employees are entitled to compensation of 33 days’ salary per year of service (capped at 24 months) or reinstatement. If considered null, reinstatement with back pay is mandatory.

Employee Protections in Spain

Employees in Spain benefit from strong legal safeguards that uphold safe working conditions, protect personal rights, and ensure fair treatment in the workplace.

Health & safety

Employers are required to conduct risk assessments and ensure safe working environments. Employees must also receive training and, where necessary, health surveillance.

Data protection

Employee data is protected under the GDPR and Spanish data laws, ensuring that personal information is securely processed.

Whistleblower protections

Employees are legally protected from retaliation when reporting breaches of law or workplace misconduct.

Protection against discrimination

Employees are legally protected against discrimination based on gender, age, religion, ethnicity, and sexual orientation.

Job Security in Spain

Permanent contracts are the norm, while fixed-term contracts must be justified by objective reasons. Abuse of temporary contracts can result in their conversion into permanent contracts.

Employment termination must follow legal procedures and include notice, cause, and, where applicable, severance pay. Collective bargaining agreements also regulate conditions of employment and dismissal.

Unfair dismissal leads to either reinstatement or financial compensation, while null dismissal results in automatic reinstatement with back pay.

Employment Conditions in Spain

Employment in Spain is governed by national labour laws and Collective Bargaining Agreements (CBAs), which set out minimum and sector-specific conditions for fair and lawful work. Employers must provide written contracts, regulate working hours, ensure health and safety, and comply with equality and anti-discrimination obligations.

Key employment conditions include:

• Written terms: Employers are required to provide clear written contracts that outline job description, salary, working hours, benefits, and termination conditions.
• Working hours: Standard working time is 40 hours per week, with a daily maximum of 9 hours unless otherwise agreed. Overtime is capped at 80 hours annually and must be compensated in pay or time off.
• Leave and holidays: Employees are entitled to 30 calendar days of paid annual leave (22 working days) plus up to 14 public holidays each year, depending on national, regional and local regulations.
• Payslips and wage payments: Employees must be paid at least once a month, usually on the last working day, with payslips clearly showing all deductions. Workers are entitled to 14 salary payments annually (12 monthly salaries plus 2 bonuses).
• Equality and anti-discrimination: Employers must guarantee equal opportunities and take measures against workplace harassment or discrimination based on gender, age, religion, ethnicity or sexual orientation.
• Workplace health & safety: Employers must conduct obligatory risk assessments, provide employee training, and carry out health surveillance where required by the role.
• Remote work: Remote work is permitted but regulated. A written agreement must cover working hours, costs (e.g. internet, electricity), equipment, data protection, and duration of the arrangement. Employers must provide or reimburse necessary tools and expenses.

Collective Bargaining Agreements (CBAs)

CBAs are mandatory in most sectors and central to shaping Spain's employment conditions. They regulate salaries, allowances, working time, leave, and rules for fixed-term contracts. The applicable CBA is determined by the company’s main activity (CNAE). This means that many employee entitlements go beyond statutory minimums, offering stronger protections depending on sector and region.

Working from Home Policy in Spain

Remote work is fully lawful in Spain, but it is regulated under Royal Decree-Law 28/2020. Employers must put a written agreement in place with each remote worker. This agreement must clearly set out working hours, equipment provided, cost coverage, data protection, and the duration of the arrangement. Collective bargaining agreements may also improve conditions.

Employers are required to provide the necessary tools or cover related costs (such as internet and electricity). Standard working hours apply, usually 40 hours per week with a daily maximum of 9 hours unless otherwise agreed. Overtime is limited to 80 hours per year.

A well-designed remote work policy in Spain should cover:

• Work schedule and hours of availability
• Costs and expenses covered by the employer (e.g. internet, electricity)
• Equipment provided or reimbursed by the company
• Data protection and monitoring rules in line with GDPR
• Health and safety measures for the home office
• Use of digital tools and acceptable use policies
• Duration of the remote work arrangement and conditions for review

Role of CBAs in remote work

Collective bargaining agreements (CBAs) often play a key role in shaping remote work in Spain. They can improve statutory conditions by providing additional allowances, specifying equipment standards, or expanding employee rights related to home working.

Workspace guidelines in Spain

Standard Hours in Spain

In Spain, working hours are regulated to protect employees’ health and ensure fair labour practices.

Standard working hours

The standard workweek is 40 hours. A typical working day is 8 hours, with a maximum of 9 hours per day unless otherwise agreed. Work is often split into morning and late afternoon sessions. Employers must ensure adequate rest breaks and comply with national law and collective bargaining agreements (CBAs).

In 2025, the Spanish Government proposed a progressive reduction of standard hours to 37.5 per week, without a salary reduction, though this has not yet been fully implemented.

Rest day

Employees are entitled to at least one full day of rest per week, in line with statutory and collective agreement requirements.

Maximum Working Hours & Overtime Laws in Spain

In Spain, maximum working hours and overtime are strictly regulated to ensure employee well-being and work-life balance.

Maximum daily & weekly hours

In Spain, the standard workweek is 40 hours, with a daily cap of 9 hours. Overtime is limited to a maximum of 80 hours per year.

Overtime pay rate

Overtime must be compensated either through additional pay or equivalent time off, as agreed in the employment contract or collective agreement.

Role of CBAs

Collective bargaining agreements play an important role in regulating working hours and overtime in Spain. They can provide more favourable terms for employees, including shorter working weeks, additional rest periods, or higher overtime pay rates.

General Employee Pay Regulations in Spain

Employee pay in Spain is regulated by national labour law and collective bargaining agreements to ensure employees receive fair and transparent wages. Employers must issue payslips showing gross salary, statutory deductions, and net pay, and they are required to comply with minimum wage rules, annual leave entitlements, and overtime laws. Non-compliance can result in fines, back pay, and employee claims.

The following are key aspects of how employee pay is managed and regulated in Spain:

Minimum wage

The national minimum wage in 2025 is €1,184 per month (14 payments) or €1,381 per month (12 payments), equal to an annual minimum of €16,576.

Frequency

Employees in Spain must be paid at least once a month. Salaries are typically paid on the last working day of the month. By law, workers are entitled to 14 payments per year (12 monthly salaries plus two additional bonuses, often in July and December).

Employers must also issue detailed payslips for every payment.

Deductions and contributions

Employers are responsible for withholding and remitting mandatory deductions on behalf of employees, including:

• Social security contributions: approx. 6.48% of gross salary, covering healthcare, pensions, unemployment and training
• Income tax (IRPF): progressive withholding ranging from 19% to 47%, depending on salary, region, and personal/family situation

Employers must also contribute their own share of social security costs (approximately 32.5%).

Payday

Wages are usually paid on the last working day of the month, although CBAs or company agreements may set different arrangements. Payslips must clearly show all earnings and deductions.

Penalties for non-compliance

Failure to comply with wage payment obligations, such as delayed wages, unauthorised deductions, or incorrect contributions, can expose employers to fines, back payments, and employee claims. Misclassification of employees as contractors can also lead to penalties, retroactive social security contributions, and compensation claims.

Leave Entitlement in Spain

Spain provides generous statutory leave entitlements to ensure employees have sufficient time for rest, health, and family responsibilities. Annual leave and public holidays are regulated by national law and collective bargaining agreements, with additional entitlements covering sickness, maternity, paternity, and family needs.

Holiday entitlement

Employees are entitled to 30 calendar days of paid annual leave per year (22 working days). Leave cannot be replaced by payment except upon termination. Collective agreements may extend the entitlement or set rules for scheduling.

Public holidays

Spain observes up to 14 public holidays each year. These include 8 national holidays, supplemented by regional and local holidays. When a public holiday falls on a Sunday, it may be moved to another weekday.

Spain Public Holiday Calendar 2025

Types of Leave in Spain

In addition to annual holiday and public holidays, employees in Spain are entitled to a range of statutory leave types covering health, family and personal circumstances.

Sick leave

Paid sick leave starts from the 4th day of absence. Employees receive 60% of their base salary until day 20, and 75% from day 21 onwards. From day 16, payments are covered by Social Security.

Maternity leave

Mothers are entitled to 16 weeks of fully paid maternity leave (32 for single-parent families), fully funded by Social Security. Leave can be extended in cases of multiple births or medical complications.

Paternity leave

Fathers are entitled to 16 weeks of paid paternity leave, also fully funded by Social Security, ensuring equal treatment to maternity leave.

Marriage or registered partnership leave

Employees are entitled to 15 calendar days of paid leave.

Bereavement leave

Employees may take 2 days (or 4 days if travel is required) in case of death, accident or serious illness of a close relative up to second degree.

Relocation leave

Employees are entitled to 1 day of leave for relocation of their habitual residence.

Lactation leave

Parents are entitled to 1 hour per day of leave until the child is 9 months old. This can be accumulated into full days by agreement.

Parental leave

Employees may take up to 12 months of unpaid parental leave, which can be extended to 3 years per child.

Employee Termination Procedures & Guidelines in Spain

Employment in Spain cannot be ended “at-will”. Termination must have a valid cause or be agreed mutually, and it must follow statutory procedures. Employers must provide written notice, final payment, and where applicable, severance.

Termination procedure

Termination must comply with the employment contract and statutory labour laws. Employers must provide written notice and demonstrate cause.

This includes:

• Written notice is required, typically 15 days.
• Dismissal must comply with the contract and labour law requirements.
• Employers must document the grounds for termination to avoid disputes.

Final payment

At the time of termination, employers must settle all outstanding dues, including:

• Unpaid wages and accrued holiday
• Pro-rata salary and bonuses (if applicable)
• Severance pay, if due
• Certificate of employment

Cause of termination

Valid reasons for dismissal include:

• Misconduct
• Poor performance
• Redundancy or business closure

Unfair Dismissal Guidelines in Spain

In Spain, failure to follow the legal requirements for fair dismissal carries serious repercussions for employers. A dismissal is considered unfair when no valid reason is established or procedures are not correctly followed.

If a dismissal is declared unfair, the employee is entitled to compensation of 33 days’ salary per year of service, capped at 24 months, or reinstatement if ordered by the court. In the case of a null dismissal, such as one that is discriminatory or violates fundamental rights, the employee must be reinstated immediately with full back pay. Employers that breach dismissal procedures may also face financial penalties, liability for unpaid entitlements, and reputational damage. In addition, breaches expose companies to disputes in labour courts, which can be costly and time-consuming to resolve.

Repercussions for breach

If employers fail to follow correct procedures, they may face reinstatement orders, significant compensation costs, fines, and reputational risk.

• Compensation: Employees are entitled to 33 days of pay per year of service, up to a maximum of 24 months.
• Reinstatement: Courts may reinstate the employee instead of awarding compensation.
• Null dismissal: If dismissal is discriminatory or violates fundamental rights, the employee must be reinstated immediately with full back pay.
• Other penalties: In case of unfair dismissal, employers may also face financial penalties, liability for unpaid entitlements, and reputational damage.

Other End-of-Employment Guidelines in Spain

Severance pay and compensation

Compensation applies in cases of unfair dismissal and redundancy. Severance is calculated based on years of service and capped at statutory limits.

Notice periods

The statutory notice period is generally 15 days, although collective agreements may require longer periods.

Contractors vs employees

Independent contractors must be genuinely self-employed. If a worker is misclassified, the company may face fines, liability for back pay, unpaid social contributions, and compensation claims.

Fixed-term contracts

Fixed-term contracts in Spain are tightly regulated. They may not exceed 6 months, except in specific circumstances where they can extend up to 12 months. All fixed-term contracts must be justified by objective reasons. Abuse of temporary contracts can result in their conversion into permanent contracts.

Hiring employees in Spain at a glance

CURRENCY

Euro (EUR)

WORKING HOURS

Typically 40 hours per week

PUBLIC/BANK HOLIDAYS

14 national holidays, including regional holidays

CAPITAL

Madrid

LANGUAGE

Spanish (Castilian). Some autonomous communities have co-official languages such as Catalan, Basque, Galician, etc.

REMOTE WORKERS

Permitted, regulated under Royal Decree-Law 28/2020.

MINIMUM HOURLY SALARY

Approximately €9.20, based on minimum wage of €1,184/month.

TAX YEAR

1st Jan - 31st Dec

DATE FORMAT

DD/MM/YYYY

MISCLASSIFICATION PENALTIES

Fines ranging from €3,126 to €10,000+ per employee, potential back payments of taxes, social security and employee entitlements.

FUN FACT

Spain recently introduced a “digital nomad visa” that allows remote professionals from around the world to live and work in the country for up to five years.

Employment services in Spain

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Why Employers of Record aren't legally viable in Spain

In Spain, the Employer of Record model is not legally compliant. Spanish labour law requires that the company directing the employee’s work (the “real employer”) must also be the company responsible for payroll, contracts, and social security (the “formal employer”). 

Splitting these roles, as it happens under an EOR, is considered illegal labour leasing (cesión ilegal de trabajadores) and can lead to heavy fines, back payments, and joint liability for both parties.

How Boundless supports companies in Spain

While we cannot act as an EOR in Spain, we help companies to:

Register a foreign entity as an employer

We guide companies with an existing EU entity through the process of registering as an employer in Spain so they can hire staff locally without creating a full subsidiary.

Set up a Spanish legal entity

We support companies in establishing their own legal entity in Spain, enabling them to employ directly and compliantly for long-term growth.

Taxes in Spain

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Employment tax: 

~32.5%

Social security contributions in Spain cover pension, healthcare, unemployment and training, paid by the employer to the Social Security Treasury (TGSS).

SOCIAL SECURITY CONTRIBUTION	CONTRIBUTION AMOUNT
Common contingencies	23.60%
Unemployment (permanent)	5.50%
Unemployment (temporary)	6.70%
FOGASA	0.20%
Training	0.60%
MEI (Intergenerational Equity Mechanism)	0.67%
Occupational accident/illness (per CNAE)	0.90% - 8.50%
Solidarity quota (above max base)	0.92% / 1% / 1.17% (by trances)

Employee tax: 

19% – 47% + social security contributions

Social security contributions made to TGSS for employees are typically ~6.48% of salary + income tax (19% to 47%).

Income tax:

GROSS INCOME	PROGRESSIVE TAX RATE
€0 - €12,450	19%
€12,451 - €20,200	24%
€20,201 - €35,200	30%
€35,201 - €60,000	37%
€60,001 - €300,000	45%
Above €300,000	47%

SOCIAL SECURITY CONTRIBUTION	CONTRIBUTION AMOUNT
Common contingencies	4.7%
Unemployment (permanent)	1.55%
Unemployment (temporary)	1.6%
Training	0.10%
MEI (Intergenerational Equity Mechanism)	0.13%
Solidarity quota (above max base)	same tranches as the employer

Statutory benefits in Spain

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Health insurance

Provides universal healthcare through the social security system, covering sickness, disability, maternity, unemployment, and retirement.

Paid leave & holidays

Employees are entitled to a minimum of 30 calendar days (22 working days) of paid annual leave plus up to 14 public holidays.

Parental leave

Maternity and paternity leave are both 16 weeks, fully paid by Social Security. This entitlement ensures equal treatment for both parents.

Common non-mandatory benefits in Spain

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Private health insurance

Meal vouchers or subsidies

Transport allowance

Additional pension or savings schemes

Flexible working arrangements  and remote work equipment

Professional development or training allowances

Employee rights and protections in Spain

Read more

Right to join trade unions and participate in strikes

Legal protection for whistleblowers against retaliation

Right to equal treatment and protection from discrimination

Right to safe and healthy working conditions

Protection of personal data under GDPR and Spanish data laws

Protection against unfair dismissal

Leave in Spain

Read more

Paid time off: Employees are entitled to 30 calendar days per year (22 working days). This leave cannot be replaced by payment, except on termination.

Maternity leave: 16 weeks, fully paid by Social Security. Leave can be extended in cases of multiple births or complications.

Public holidays: Up to 14 days per year (a mix of national, regional and local). If a holiday falls on a Sunday, it can be moved to another day.

Paternity leave: 16 weeks, fully paid by Social Security, with equal treatment to maternity leave.

Sick leave: Paid from day 4 of absence. Employees receive 60% of their base salary until day 20, and 75% from day 21 onwards.

Employment conditions in Spain

Read more

In Spain, employers must comply with regulated working conditions set out in national law and collective bargaining agreements. Standard working hours are typically 40 hours per week with a daily maximum of 9 hours, unless otherwise agreed. Overtime is capped at 80 hours per year and must be compensated with pay or time off. Employers are also required to ensure workplace health and safety, provide equal opportunities, and comply with collective agreements governing pay, leave and working conditions.

Payment frequency in Spain

Employees must be paid at least once a month, with wages usually settled on the last working day of the month. Payslips must clearly show deductions. Workers are entitled to 14 salary payments annually (12 monthly payments plus two additional bonuses).

End of employment in Spain

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Termination requires a valid cause or mutual agreement and must be given in writing. A notice period of 15 days is typical. If dismissal is found to be unfair, employees are entitled to compensation of 33 days of pay per year worked (capped at 24 months) or reinstatement. In cases of null dismissal, employees must be reinstated immediately with back pay. Final payments must include outstanding salary, unused holiday, and any applicable severance.

Frequently asked questions

What are my options if I want to hire a worker in Spain?

While Spain offers a strong and diverse talent pool, companies must be mindful that only certain hiring models are legally compliant under Spanish labour law.

1. Establishing a Spanish legal entity
   Setting up a Spanish legal entity, such as a "Sociedad Limitada" (SL) or "Sociedad Anónima" (SA), is the most compliant option for a long-term presence in Spain. This involves registering with the Mercantile Registry, obtaining a tax identification number (NIF), and registering with social security. A Spanish legal entity is subject to corporate income tax and other relevant taxes. This is the best option for companies planning significant, ongoing business activities in Spain with multiple employees.
2. Establishing a non-permanent establishment
   A non-permanent establishment allows a foreign company to operate in Spain for tax and social security purposes without forming a full legal entity. This involves registering with the Spanish tax authorities and social security. Generally, a non-permanent establishment isn't subject to corporate income tax in Spain unless the employee has the authority to enter into contracts or conduct core business activities. This option might be more suitable for companies testing the Spanish market or with a limited number of employees without significant decision-making power.
3. Engaging independent contractors
   If you need specialised, project-based work and the individual operates with significant autonomy and control over how they perform the work, engaging an independent contractor might be suitable. However, proper worker classification is crucial. Misclassifying an employee as an independent contractor is a serious offence in Spain and can result in significant penalties. Ensure the working relationship truly reflects an independent contractor arrangement.

How long does it take to set up a company in Spain?

Generally, the process of registering a company in Spain can take several weeks, depending on the complexity of the company structure, approvals from different authorities, and the completeness of filings.

However, the difficult part comes after the initial setup. Once a company is registered in Spain, it must comply with extensive ongoing obligations: registering employees with the Social Security Treasury (TGSS), making mandatory employer and employee contributions, providing statutory benefits such as paid annual leave, parental leave and sick pay, applying and adhering to the relevant collective bargaining agreement (CBA), deducting and remitting income tax (IRPF), and maintaining statutory records and filings. Employers must also keep pace with evolving regulations, regional variations in taxation and employment law, and the strict procedural requirements around dismissals and terminations, all of which add significant administrative burden.

Here is an overview of everything you will need to do.

Can I employ people as independent contractors in Spain?

Yes, you can employ people as independent contractors (autónomos) in Spain, but only where the relationship genuinely reflects contractor status.

Independent contractors must:

• Register as autónomos with the Spanish tax and social security authorities.
• Invoice for their services and pay their own income tax and social security contributions.
• Work in a way that reflects genuine independence, such as controlling their own schedule, methods of work, and tools.

If the above is not the case, the safe and compliant route is establishing a local entity (or registering an EU entity) and hiring employees directly.

If an independent contractor is treated like an employee (receiving regular pay, working set hours under your supervision, using your equipment, or being integrated into your organisation), Spanish authorities may reclassify them as an employee. Reclassification brings serious consequences, including liability for back pay of wages and benefits, retroactive social security contributions, fines ranging from €3,126 to over €10,000 per worker, and, in extreme cases, even potential criminal charges.

Read more on why hiring remote people as independent contractors is a bad idea.

What does HR compliance mean in Spain, and why does it matter?

When you hire employees in Spain, you take on a wide range of obligations as an employer. HR compliance means ensuring that your company’s policies, contracts, and practices align with Spanish labour law and the applicable collective bargaining agreement (CBA).

In Spain, compliance covers areas such as maximum working hours and overtime limits, timely payment of wages, mandatory social security contributions to the Tesorería General de la Seguridad Social (TGSS), and proper withholding of income tax (IRPF). It also includes providing statutory benefits like paid annual leave, public holidays, sick leave, and maternity and paternity leave, as well as upholding workplace health and safety standards and equality and anti-discrimination rules. Employers must issue written contracts, maintain statutory records, and follow strict legal procedures for dismissals and terminations.

These laws are designed to protect employees and guarantee their rights to fair pay, social protection, and job security. For employers, proper compliance minimises risks such as fines, liability for back pay and social security contributions, reinstatement orders in cases of null dismissal, and reputational damage from disputes with employees or labour authorities.

In short, HR compliance in Spain not only protects employees but also safeguards businesses from costly liabilities and legal risk.

How much does it cost to employ someone in Spain?

As with every other country, there are certain costs associated with employing a worker in Spain that come on top of the gross salary you are offering. Employers are responsible for a range of statutory contributions and benefits in addition to wages.

Key employer costs include:

• Common contingencies: 23.60% of gross salary, covering sickness, maternity, disability, retirement and death.
• Unemployment insurance: 5.50% for permanent contracts (6.70% for temporary contracts).
• FOGASA (Wage Guarantee Fund): 0.20% to protect workers in case of employer insolvency.
• Training fund: 0.60% to support professional development.
• Intergenerational Equity Mechanism (MEI): 0.67% to strengthen the pensions system.
• Occupational accident/illness insurance: 0.90–8.50%, depending on sector risk level (CNAE code).
• Solidarity quota: 0.92% - 1.17% applied to salaries above the maximum contribution base (€4,909.50/month in 2025).

On top of these contributions, employers must also withhold employee social security contributions (approx. 6.48% of gross salary) and income tax (IRPF, 19–47% depending on income, region and personal circumstances) and remit them to the authorities.

In short, the true cost of employment in Spain extends significantly beyond the employee’s gross salary and varies depending on contract type, industry sector, and the employee’s income level.

Is hiring through an Employer of Record in Spain legal?

No, hiring through an Employer of Record (EOR) is not a legally viable option in Spain. Spanish labour law requires that the entity directing and supervising the employee’s work (the Real Employer) must also be the entity responsible for employment administration, such as payroll, social security, and benefits (the Formal Employer). Splitting these roles, as happens under an EOR model, is considered illegal labour leasing (cesión ilegal de trabajadores).

This means that if a company uses an EOR in Spain, both the EOR and the client company can be held jointly liable for the employee’s rights and entitlements.

Consequences can include:

• Fines of up to €225,000 for illegal assignment of workers
• Back payment of wages, benefits, and social security contributions
• Joint liability for severance, unfair dismissal compensation, and workplace accidents
• In extreme cases, even potential criminal liability

Some providers still market EOR services in Spain, often under the guise of consultancy or outsourcing, but if the client directs the day-to-day work, the arrangement is not compliant. To employ compliantly, companies must either establish a local legal entity (or register an EU entity), set up a non-permanent establishment, or engage genuine independent contractors.

Boundless supports companies in Spain by helping them either register their foreign entity as an employer or set up their own Spanish entity to hire directly. In Spain, we do not offer employment through an Employer of Record.

What are the legal responsibilities of a company when they employ in Spain?

When employing people in Spain, companies take on a broad set of legal responsibilities designed to protect employees and ensure compliance with labour law. Employers must provide a written employment contract that sets out the job role, salary, working hours, and termination conditions, while also applying the relevant collective bargaining agreement (CBA), which often goes beyond statutory minimums.

They are required to register with the Tesorería General de la Seguridad Social (TGSS) and handle payroll correctly, which includes paying employer social security contributions of about 32.5% of gross salary, withholding employee contributions of roughly 6.5%, and deducting and remitting income tax (IRPF).

Beyond pay and contracts, employers must also:

• Comply with statutory rules on working time (40 hours per week, 9 hours per day maximum), overtime (80 hours per year), and leave entitlements such as annual leave, public holidays, sick leave, and parental leave.
• Ensure workplace health and safety through risk assessments, training, and, where necessary, health surveillance.
• Uphold equality and anti-discrimination standards, and protect employee data in line with GDPR.

Finally, when ending employment, companies must follow strict dismissal procedures: written notice, valid grounds, and, where appropriate, severance payments. Unfair dismissals can result in compensation or reinstatement, while null dismissals (for example, discriminatory ones) require immediate reinstatement with back pay.

What taxes and contributions do I need to pay in Spain?

When employing in Spain, both the company and the employee are responsible for taxes and contributions. As the employer, you must register with the Tesorería General de la Seguridad Social (TGSS) and ensure correct calculation and remittance each month.

Employer contributions amount to around 32.5% of gross salary and include:

• Common contingencies (23.60%) covering sickness, maternity, disability, retirement, and death
• Unemployment insurance (5.50% permanent / 6.70% temporary)
• FOGASA (0.20%): Wage Guarantee Fund
• Training fund (0.60%)
• Intergenerational Equity Mechanism (MEI) (0.67%), which supports pensions
• Occupational accident and illness insurance (0.90–8.50%), depending on industry risk level
• Solidarity quota (0.92 / 1.00 / 1.17%), which applies to salaries above the maximum monthly base (€4,909.50 in 2025).

Employee contributions total about 6.48% of gross salary, withheld from pay by the employer:

• Common contingencies (4.70%)
• Unemployment insurance (1.55% permanent / 1.60% temporary)
• Training (0.10%)
• MEI (0.13%)
• Solidarity quota: same rates as the employer, for high salaries above the contribution ceiling.

On top of social security, employees also pay income tax (IRPF). This is a progressive tax, with combined state and regional rates ranging from 19% to 47%, depending on income level, region of residence, and personal/family circumstances. Employers are responsible for applying monthly IRPF withholdings based on these factors.