Employer of Record in Spain: A Comprehensive Guide for 2026

Introduction

Employer of Record in Spain requires compliance with the Workers’ Statute, applicable collective bargaining agreements (CBAs), and registration with the General Treasury of the Social Security System (Tesorería General de la Seguridad Social, TGSS). These rules govern employment contracts, payroll, employee benefits, and statutory obligations for legal hiring in Spain.

However, Spain’s employment system involves layered regulations, sector-specific CBAs, and strict worker classification rules, which can make compliant hiring and ongoing workforce management complex. Errors in contracts, payroll handling, or classification may lead to penalties, audits, or legal exposure.

Skuad’s Employer of Record (EOR) solution supports companies in hiring employees in Spain without establishing a local entity by managing compliant employment, payroll administration, statutory contributions, and workforce operations through a structured framework.

This guide covers Spain’s employment contracts, working hours and leave, taxation, visa requirements, probation and termination rules, and how to hire employees in Spain without setting up a local entity.

Spain at a glance

• Population: 47.8 million
• Currency: Euro (EUR)
• Capital city: Madrid
• Languages spoken: Spanish
• ‍GDP: USD 1.73 trillion

How does employment regulation work in Spain?

Employment in Spain is governed by national labor laws and collective bargaining agreements. These regulations define employment relationships, working conditions, employee rights, and employer responsibilities, and employers must comply with requirements such as proper hiring practices, correct contract structuring, and social security registration.

Clear employment policies help ensure consistent payroll processing, benefits administration, and compliance with Spanish labor and tax obligations, supporting smooth and structured workforce management.

What are the types of employment contracts?

Employment contracts in Spain define the terms, duration, and conditions of the working relationship between an employer and an employee. They are generally categorized based on the nature and length of employment.

Definite contract

A definite contract is used for employment arrangements with a fixed duration or specific purpose, such as project-based roles, seasonal work, or temporary replacements. These contracts must be clearly justified under Spanish labor regulations and follow strict conditions to support proper usage.

Indefinite contract

An indefinite contract is the most common form of employment in Spain. It establishes an ongoing employment relationship without a set end date and is typically used for permanent positions. This contract type provides greater job security and stronger employee protections under Spanish labor law.

Employee entitlements under the labor law are as follows:

What are the major public holidays in Spain?

Spain observes a set of national public holidays that are recognized across the country under Spanish labor regulations. These holidays reflect important cultural, historical, and religious events.

What are contractors and full-time employees in Spain?

Organizations in Spain can hire either full-time employees or independent contractors depending on business needs. Contractors are used for short-term or specialized work, while full-time employees support long-term and ongoing roles. Employment type should be chosen based on role scope and duration.

Here’s how Skuad helps you:

EOR for full-time employees

Hire employees in Spain and 160+ countries without setting up a local entity.

• Support compliant employment contracts and onboarding
• Manage payroll, tax withholdings, and social security contributions
• Administer employee benefits and leave entitlements
• Support full employee lifecycle management, including offboarding
• Facilitate salary payments in 70+ currencies

Contractor management

• Manage contractor onboarding and agreement handling
• Support invoice processing and payments
• Help maintain compliant contractor engagements
• Facilitate contractor payments in 70+ currencies
• Maintain contractor records and documentation
• Support management of distributed contractor teams

Whether hiring contractors or full-time employees, Skuad helps businesses build and manage teams in Spain through a centralized global employment platform.

Full-time employees or contractors? Skuad supports both in Spain. See pricing.

How can companies hire employees in Spain?

Companies can hire employees in Spain by establishing a local entity and complying with applicable labor laws, payroll, tax, and social security requirements. Alternatively, businesses may engage an Employer of Record (EOR) to hire employees without setting up a local entity.

Hiring considerations in Spain

Businesses hiring in Spain should understand the country's employment framework. Employment relationships are governed by the Spanish Workers' Statute and applicable Collective Bargaining Agreements, which establish employment conditions across industries and occupations.

Employment contracts can be established on either a fixed-term or indefinite-term basis, subject to applicable labor laws and contractual requirements. Employers are responsible for payroll, tax, social security, and other statutory obligations throughout the employment lifecycle.

Sourcing talent in Spain

Employers commonly use online job boards and professional networking platforms to identify candidates. Some of the popular recruitment platforms used in Spain include:

• LinkedIn
• InfoJobs
• Indeed Spain (indeed.es)
• Infoempleo
• Jobandtalent
• Tecnoempleo

While these platforms help employers identify candidates, businesses remain responsible for candidate screening, employment contracts, payroll administration, statutory compliance, and workforce management.

Set up an entity in Spain

Companies planning to hire employees directly in Spain generally establish a local legal entity before commencing employment. This process involves business registration, obtaining the necessary tax registrations, registering with the Spanish Social Security system, and meeting applicable employer registration requirements.

Following entity setup, employers are responsible for employment contracts, payroll administration, tax withholding, statutory contributions, employee benefits, and ongoing compliance with Spanish labor laws and applicable collective bargaining agreements. These obligations continue throughout the employment relationship.

Businesses should evaluate the legal, administrative, and operational responsibilities associated with establishing and maintaining a local entity before determining the most appropriate hiring approach for their workforce requirements.

Hiring through a global EOR

An Employer of Record (EOR) enables companies to hire employees in Spain without establishing a local legal entity. This approach allows businesses to expand into the Spanish market while employment is managed in accordance with local labor laws, tax regulations, and statutory requirements.

Key benefits

• Entity-free hiring: Companies can hire in Spain without establishing a local subsidiary or branch.
• Compliance support: Employment practices are managed in alignment with Spanish labor laws and statutory requirements.
• Payroll management: Salary processing, tax withholding, and statutory contributions are handled in a structured manner.
• Faster onboarding: Employees can be integrated with reduced administrative steps.
• Reduced administrative workload: Employment administration and compliance responsibilities are centrally managed.

For companies evaluating this approach, Skuad supports hiring and workforce operations in Spain through its Employer of Record solution, enabling businesses to hire and manage employees without requiring a local entity.

Here is what Skuad helps with:

• Employment contract generation across 160+ countries, aligned with labor laws and statutory requirements
• Statutory contribution management across supported markets, covering applicable employer and employee obligations
• Payroll processing in 70+ currencies with accurate tax withholding and statutory deductions
• Termination and offboarding support aligned with local employment requirements across supported markets
• Work permit and visa support for eligible international hires

Book a demo to see how Skuad onboards your first Spain hire without entity setup.

What are the types of visas in Spain?

Foreign nationals traveling to Spain may require a visa depending on their nationality, purpose of travel, and intended length of stay. Spain offers different visa categories for short-term and long-term stays, each with specific eligibility criteria and application requirements.

Who needs a visa?

• Non-European Union (EU), European Economic Area (EEA), and non-Swiss nationals may require a visa to enter or work in Spain, depending on their nationality and purpose of travel.
• Citizens of EU, EEA member states, and Switzerland generally do not require a visa to live or work in Spain.
• Many nationalities may enter Spain for short stays without a visa under the Schengen visa waiver rules, subject to applicable conditions.
• Foreign nationals intending to work or stay in Spain for an extended period generally require the appropriate long-stay visa and, where applicable, a residence authorization.

What are the work visa requirements needed for submission?

• Completed national visa application form
• Valid passport with the required validity period
• Passport-sized photographs meeting Spanish visa specifications
• Employment contract or job offer from a Spanish employer
• Approved work authorization, where applicable
• Proof of educational qualifications or professional experience, if required
• Criminal record certificate, where applicable
• Medical certificate, if required for the visa category
• Proof of payment of the applicable visa fees
• Additional supporting documents requested by the Spanish consulate or immigration authorities

Understanding Spain's visa requirements requires familiarity with the applicable visa categories, eligibility criteria, documentation requirements, and immigration procedures. Employers hiring international talent may also need to comply with work authorization and residence permit requirements before employment begins.

Skuad's global immigration support helps organizations manage international hiring by assisting with visa and work authorization processes, including:

• Supporting work permit and visa applications for foreign employees joining your team
• Coordinating required documentation with the relevant immigration authorities
• Tracking documentation requirements, permit validity, and key deadlines across the permit lifecycle
• Ensuring your workforce remains aligned with changing immigration and compliance requirements

What are the work permit requirements in Spain?

What is onboarding?

Onboarding refers to all the activities recruiters perform to help employees settle in the new company. A smooth onboarding process enhances employees' productivity, leads to their satisfaction, and improves retention rates.

Tips for successful onboarding of new employees in Spain

Here is how you can plan the process of hiring and onboarding to get new employees acquainted with the new work culture in Spain:

• Completing the background check: Employers should conduct a thorough background check in Spain on the candidate they plan to hire. They should seek all the information relevant to the position the individual is being hired for, such as education history, prior experience, etc.
• Sending an offer letter: It is not legally mandatory to send a written job offer letter to employees in Spain. Nevertheless, keeping the hiring process documented might be a good idea.
• Finishing the necessary paperwork: Employers must finish formalities such as legal agreements, tax forms, or non-disclosure agreements based on the company's onboarding software.
• Enrolling the employee in various benefits: Employees in Spain are entitled to various Spanish benefits that comply with Spanish labor laws under the European Union, the Workers’ Statute, the Spanish Constitution, and so on. Companies should enroll employees in all the benefits.
• Adding the employees to Spain payroll: Employees working in Spain should ideally receive payments in euros (EUR) unless they have agreed to accept the payment in some other currency.  
• Handing over the gadgets: Whether employees work on-site or remotely, employers should provide the right tools and gadgets to accomplish the task.
• Setting up their official accounts: Employees should be able to identify themselves as part of the organization hiring them. The organization is responsible for setting up all the accounts an employee will need.

What are the tax requirements in Spain?

Employer tax obligations

Spanish employers are responsible for making mandatory social security contributions based on an employee's contribution base (base de cotización), subject to the applicable monthly contribution limits. Contribution rates vary depending on the type of contribution and, in some cases, the employer's business activity.

The table below shows all the Spanish employer payroll taxes:

Employer taxation

Employee taxation

How is payroll managed in Spain?

Payroll in Spain involves calculating employee salaries, withholding applicable taxes, deducting statutory social security contributions, and complying with local payroll reporting and employment regulations.

How to pay?

Here’s how an organization can process the Spanish payroll:

• Collect all the information from the individual who has been hired.
• Calculate the gross pay of the employee based on how much they have worked and the rate of pay decided when they were hired.
• Calculate the net pay after deducting the taxes, benefits, and social security contributions.
• Pay the employee and provide a payslip. Keep the payroll records.
• The employer has to forward all the deductions made by the employee on their behalf.

Best ways to pay employees in Spain

• In-house payroll management: Employers establish and manage their own payroll function, which may require dedicated HR, payroll, and compliance resources.
• Local payroll provider: Employers engage a local payroll provider to support payroll administration while retaining responsibility for compliance with applicable labor, tax, and social security requirements.
• Payroll outsourcing: Employers partner with a payroll provider or Employer of Record (EOR) to support payroll administration, statutory contributions, tax withholding, employment compliance, and workforce management.

Skuad supports payroll management in Spain by assisting with payroll administration, statutory contributions, tax withholding, and compliance with applicable employment requirements.

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How do probation and termination work in Spain?

In Spain, the probation time is defined by the collective agreement of the job profile. But without a collective agreement, the trial time cannot exceed six months.

• Six months for technical graduates or qualified specialists
• Two months for all others

Permanent contracts, training contracts, and special employment contracts have their own stipulated probation period.

Termination details

What does the offboarding process involve in Spain?

A smooth offboarding process can ensure that the departing employees speak well about an organization’s business culture in Spain.

Offboarding an employee in Spain involves the following steps:

• Notifying all the departments about the employee's departure.
• Exit interview of the employee to understand their experience.
• Transfer of charge to a new employee and handing over gadgets and other essentials.
• Revoking the departing employee’s access to all digital media.
• Final payments and documentation.
• Updating the company records.

What are the steps to set up a subsidiary in Spain?

Setting up a subsidiary in Spain involves incorporation, tax registration, and labor compliance before starting operations, followed by ongoing payroll and regulatory obligations under Spanish law.

Businesses typically follow these steps:

Step 1: Obtain a tax identification number as a foreign investor.

Step 2: Register the company with Spain's Commercial Registry.

Step 3: Open a corporate bank account in the company's name.

Step 4: Notarize the company documents before a Spanish notary.

Step 5: Complete Form D1-A as required.

Step 6: Submit the form to the Directorate-General for Trade and Investments.

Step 7: Pay the applicable transfer tax and stamp duties.

Step 8: Register the subsidiary with the relevant authorities, including the Social Security and tax authorities, and obtain the deed of incorporation issued by the Commercial Registry.

For companies that prefer to hire employees without setting up a local entity, Skuad’s Employer of Record (EOR) solution supports compliant hiring, payroll administration, and workforce management in Spain without requiring a local entity.

How do PEO services work in Spain?

A Professional Employer Organization (PEO) is a service provider that enters into a co-employment arrangement with a business and supports the management of employment-related functions such as payroll administration, employee benefits, HR operations, and workforce administration.

Under a PEO model, the client company typically remains the legal employer and is generally required to maintain a local entity in Spain where employees are engaged. While the PEO handles administrative and HR-related responsibilities, the client organization continues to hold key employer obligations through its local presence.

For organizations without a legal entity in Spain, an Employer of Record (EOR) provides a compliant hiring framework. Unlike a PEO, an EOR acts as the legal employer on behalf of the client organization, enabling businesses to hire talent while managing payroll, compliance, and workforce administration.

Build teams in Spain without entity setup

At this stage, you have a clear understanding of Spain’s employment framework, including labor laws, contract types, payroll processes, tax obligations, employee entitlements, and statutory compliance requirements that govern hiring and workforce management in the country.

Companies expanding into Spain must align hiring practices with these regulations while managing responsibilities such as employment contracts, payroll administration, social security contributions, and ongoing compliance obligations throughout the employee lifecycle.

For organizations that want to build teams in Spain without establishing a local entity, Skuad’s Employer of Record (EOR) solution supports compliant hiring, payroll management, and workforce administration through a structured approach while enabling companies to engage talent across Spain.

Start hiring in Spain without setting up a legal entity. Book a demo.

FAQs

1. What is an employer of record in Spain?

An employer of record in Spain is a third-party organization that legally employs workers through its Spanish entity. It manages payroll, IRPF income tax withholding, social security registration with the TGSS, and compliance with the Workers' Statute, while the client company oversees day-to-day work.

2. Why do companies use an employer of record in Spain?

Companies use an employer of record in Spain to hire employees without setting up a local entity. It helps manage payroll, tax withholding, social security contributions, and compliance with Spanish labor regulations while allowing businesses to focus on operations and team management.

3. Can a foreign company hire in Spain without a local entity?

Foreign companies can hire in Spain through an EOR without setting up a local entity, as the EOR acts as the legal employer and handles registration with the TGSS and tax authorities. The client company retains operational control of the employee’s daily responsibilities.

4. What are the compliance risks of using an EOR in Spain?

Spain has strict regulations against improper labor leasing arrangements. Incorrect classification of workers or misuse of contract types can lead to labor inspections, financial penalties, and liability for unpaid wages and social security contributions. Proper application of collective bargaining agreements is also required.

5. What is the difference between a PEO and an EOR in Spain?

A PEO in Spain typically operates under a co-employment model and may require the company to already have a local entity. An EOR, however, becomes the legal employer through its own entity, allowing companies to hire employees without incorporating in Spain.

6. How quickly can an EOR onboard an employee in Spain?

EOR onboarding in Spain usually takes a few days to around two weeks, depending on document verification, preparation of the employment contract under the applicable collective bargaining agreement, and completion of social security registration with the TGSS. If all required documents are in place, the process can be completed more quickly.

Termination & Offboardings

A smooth offboarding process can ensure that the departing employees speak well about an organization’s business culture in Spain. 

Offboarding an employee in Spain involves the following steps: 

1. Notifying all the departments about the employee's departure. 
2. Exit interview of the employee to understand how their experience has been.
3. Transfer of charge to a new employee and handing over gadgets and other essentials. 
4. Revoking the departing employee’s access to all digital media. 
5. Final payments and documentation. 
6. Updating the company records.

Cultural Considerations 

The cultural norms in Spain are different from those in other countries. Foreign employees hired through Employer of Record in Spain may initially find it challenging. However, the collective effort of both the employer and the employee can help employees adopt the business etiquette in Spain and foster a great work environment. 

Employers can offer cultural training to employees working abroad to adapt to cultural diversity. They can also conduct team-building activities to ensure the new talents' smooth integration and blend with the existing team. 

Incorporation: Setting Up A Spanish Subsidiary 

Regardless of the type of business, there are eight important steps to set up a business subsidiary in Spain. Briefly, they are: 

1. Obtain tax identification number as a foreign investor
2. Register with Spain’s Commercial Registry 
3. Open a corporate bank account
4. Notarize company documents from Spanish notary
5. Complete Form D1-A
6. Deposit form with Directorate-General for Trade and Investments
7. Pay transfer tax and stamp duties
8. Register a subsidiary with appropriate authorities, such as social security and tax departments, and procure the deed of incorporation issued by the Commercial Registry.

However, before setting up your company in Spain, you must review these factors: 

1. Business: The Directorate-General for Trade and Investments (DGCI) can ask local firms with foreign shareholders and Spanish subsidiaries of non-residents to submit an annual report and any other additional information, as directed, on the status quo of their foreign shareholding.
2. Location: Regulations, expenses, and Human Resource availability vary from one region of Spain to another.  
3. Language: Although 99% of Spaniards speak Spanish, some regions use native languages, such as Catalan, more. 

Using Skuad as your EOR solution can largely simplify setting up a subsidiary in Spain. As your local partner, Skuad understands the complex employment regulations in Spain and can ensure that your subsidiary complies with the local labor laws. For instance, Skuad can draft your contracts with employees or help you register with the Commercial Registry. Read about our services here.

Professional Employer Organization (PEO)

A Professional Employment Organization (PEO) provides MSMEs with end-to-end HR services such as payroll management, compliance, health benefits, tax management, hiring, training, etc. A PEO can be seen as a firm's affordable, outsourced HR wing. 

However, if a company wants to have its HR function in-house, it can employ a company that offers Employment Of Record (EOR) services. Unlike a PEO, an EOR is a firm's legal employer. In every other way, an EOR is similar in services to a PEO. 

When expanding, your firm should choose between a PEO and an EOR. Eventually, it all comes down to your project's scope, scale, and future business opportunities.

Organizations planning to expand into new territories are better suited with a global EOR, which becomes the legal employer on behalf of the organization. Instead of associating with a PEO, a co-employment partner, organizations have more to gain by utilizing the services of an EOR solution. 

The EOR solution safeguards organizations from unexpected policy changes, loss of control, and potential risks, as the EOR bears every legal liability for the organization. In addition, the EOR handles payroll in Spain, tax, and employment law compliances. To learn more about Skuad's EOR solution, contact Skuad today. 

Conclusion: Why Is Skuad Ahead Of The Curve In Spain?

Spain is a highly regulated market focusing on protecting employees' constitutional rights. As a company looking to expand with a remote team in Spain, it is important to review the complexities of the country’s labor laws, especially provisions under its several collective agreements and the intricacies of Spain’s complicated taxation system. You must also understand how the benefits and obligations of employees differ based on whether they are from EU/EEA regions or not. 

With rapid virtual management and automation progress, global HR platforms like Skuad have democratized employment opportunities in Spain. With Skuad, companies need not go through the arduous journey of setting up subsidiaries—they can simply trust their local partners to hire exceptional talent. At the same time, they can focus on expanding their business operations.

FAQs

What is an Employer of Record in Spain?

In Spain, an Employer of Record (EOR), also called the employer of record España,  is a service provider that acts as the legal employer for staff on behalf of another company. The EOR handles all employment-related duties such as payroll processing, tax withholdings, social security contributions, and compliance with local labor laws. This service mainly benefits companies that want to operate in Spain without establishing a physical presence.

Is employer of record legal in Spain?

Yes, using an Employer of Record is legal in Spain. It is a recognized practice that allows companies, especially those outside of Spain, to hire local employees while the EOR España manages all legal and HR responsibilities. This arrangement helps companies quickly enter the Spanish market with reduced legal and administrative burdens.

What is the employment law in Spain?

Employment law in Spain is governed by the Statute of Workers, which outlines employers' and employees' rights and obligations. This includes regulations on working hours, contracts, dismissal procedures, wages, and leave entitlements—the law protects workers' rights while providing frameworks for employment relationships and collective bargaining.

What is the notice period for employees in Spain?

The notice period for employees in Spain varies based on the contract and collective agreements, but generally, for permanent contracts, the employer or the employee must give 15 days' notice before terminating the contract. This period can be longer for managerial positions or as specified by any applicable collective bargaining agreement.

What is the EU employer of record?

The EU EOR is a service that enables companies to hire employees in European countries without actually establishing a legal entity. It handles all the aspects of employment, such as the employment contract, taxes, payroll, and compliance with the country's legal standards. EORs play an important role in helping businesses scale into EU markets. 

What is the difference between a PEO and an EOR?

PEOs and EORS both provide flexibility in hiring skilled professionals from overseas. A PEO acts as an outsourced HR for companies that already have an entity, and an EOR manages all the employer-related responsibilities for companies that do not have entities in specific locations. 

What are the benefits of EOR?

EOR Spain streamlines the hiring process while adhering to total employment and labor laws. It helps businesses expand quickly without having to establish a legal entity. It also reduces the administrative burden on companies by managing taxes, employee benefits, payroll, and other related matters. 

How much does an EOR cost in Spain?

With Skuad, you can expand to Spain and work with Spanish talent, starting just $349.