Employer of Record in Spain: A Comprehensive Guide for 2026

Introduction

An Employer of Record (EOR) is a locally registered company that legally employs workers on behalf of another business, so a foreign company can hire in a country without setting up its own entity. Spain regulates this arrangement more closely than most markets.

Article 43 of the Workers' Statute requires this kind of employment relationship to run through an ETT (Empresa de Trabajo Temporal), a temporary work agency licensed under Spanish law to assign workers to a client company. Working with an ETT-licensed provider keeps a Spanish hire compliant from day one.

Within that structure, the ETT holds the Spanish employment contract, registers the worker with the Tesorería General de la Seguridad Social (TGSS), withholds IRPF (Personal Income Tax), and carries employer liability under the Workers' Statute and the applicable collective bargaining agreement (CBA). The client company still directs the employee's day-to-day work.

Companies still choose this route over setting up a Spanish entity because incorporation alone can take three to six months and cost €10,000 to €25,000 upfront in notary, registration, and legal fees.

In Spain, Skuad delivers this route through its Temporary Employment Consultancy, an ETT-licensed and consultancy-based structure, so your team can start hiring within one to two weeks instead of a quarter.

Skip the entity setup. Book a demo to see how Skuad hires your first Spain employee compliantly, in as few as two weeks.

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?

Spanish employment regulation operates in two layers:

1. The Workers' Statute (Estatuto de los Trabajadores) defines the national regulatory standards for employment rights and obligations
2. Sector-specific collective bargaining agreements (CBAs, or convenios colectivos) add binding conditions on top of it.

Together they govern contracts, working hours, leave, dismissal rules, and worker representation.

CBAs, negotiated between employer groups and trade unions, extend the baseline with sector-specific pay scales, allowances, probation and notice periods, and working-time arrangements.

The Ministry of Labor and Social Economy oversees the framework, the Labor Inspectorate (Inspección de Trabajo) enforces it, and employers must register with the TGSS before hiring their first employee.

What are the types of employment contracts in Spain?

Spain has two primary employment contract types under the Workers' Statute:

1. Definite (temporary) contracts for fixed-duration or project-specific work
2. Indefinite (permanent) contracts for ongoing employment.

Both must be formalized under the terms set by the applicable collective bargaining agreement (CBA), and misuse of temporary contracts is one of the most common triggers for labor inspection in Spain following the 2022 labor reform (Royal Decree-Law 32/2021).

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 (contrato indefinido) is the default form of employment in Spain and applies to any hire without a valid temporary justification. It has no end date, carries full statutory protections under the Workers' Statute, and requires severance of 20 days per year of service for objective dismissals or 33 days per year for unfair dismissals, capped at 12 or 24 months respectively.

What are the employee entitlements in Spain?

Employees in Spain are entitled to a 40-hour statutory work week, at least 30 days of paid annual leave, 14 public holidays, 19 weeks of birth and childcare leave per parent, and full protection under GDPR and Spanish anti-discrimination law. Sector-specific CBAs often extend these statutory minimums with additional leave, allowances, and pay conditions.

What are the major public holidays in Spain?

Employees in Spain are entitled to 14 paid public holidays per year, made up of national, regional (autonomous community), and local (municipal) dates. The Ministry of Labor publishes the national holiday calendar each year in the Official State Gazette (BOE).

The table below lists the main nationally recognized dates for 2026; specific dates and observances vary by autonomous community, and local councils add two additional holidays.

Contractors vs. full-time employees in Spain

In Spain, full-time employees work under a contract of service governed by the Workers' Statute, with the employer filing social security contributions to the TGSS and providing paid leave, severance, and dismissal protections.

Contractors work as self-employed autónomos, register with the tax authority themselves, invoice the client, and cover their own contributions.

Classification is set by the working relationship, not the contract label. If a contractor shows economic dependence, fixed hours, or client-controlled work methods, the Labor Inspectorate can reclassify them as an employee, and the client owes backdated payroll taxes, social security contributions, and penalties.

Here's how Skuad helps you:

Temporary Employment Consultancy 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 team

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 have two ways to hire employees in Spain:

• Set up a local Spanish entity and act as the direct employer
• Partner with a licensed ETT or consultancy arrangement, commonly marketed as an EOR, that acts as the legal employer on the company's behalf

Entity setup takes three to six months and often costs €10,000 to €25,000 upfront; this second route onboards a hire in one to two weeks with no incorporation.

Hiring considerations in Spain

Any company hiring in Spain, through an entity or a licensed ETT/consultancy partner, has to work within the Workers' Statute and the collective bargaining agreement (CBA) that applies to the role's sector.

These set minimum pay, working hours, probation, notice periods, and severance above the statutory baseline, and they override any less favorable contract terms.

Contracts can be indefinite (permanent) or definite (fixed-term), with definite contracts limited to specific legal justifications after the 2022 labor reform. The employer remains responsible for payroll processing, IRPF withholding, TGSS contributions, and dismissal compliance for the full duration of the employment relationship.

Sourcing talent in Spain

The main platforms Spanish employers use to source talent are LinkedIn, InfoJobs, Indeed Spain, Infoempleo, Jobandtalent, and Tecnoempleo. InfoJobs and Infoempleo dominate general roles; Tecnoempleo is the leading tech-specific board; Jobandtalent covers frontline and shift-based work; LinkedIn remains the default for mid-to-senior professional hires.

Sourcing is only the first step. The employer, or the licensed ETT or consultancy partner acting on the employer's behalf, remains responsible for candidate screening, contracting under the applicable CBA, payroll administration, and ongoing compliance.

How to set up an entity in Spain?

Setting up a Spanish entity to hire directly takes three to six months and involves incorporating a legal entity (typically a Sociedad Limitada), obtaining a tax identification number (NIF), registering with the Commercial Registry, opening a corporate bank account, and registering as an employer with the TGSS before the first hire. Upfront costs run €10,000 to €25,000 in notary, legal, and registration fees.

Once the entity is live, the company holds full employer liability under Spanish labor law. That covers employment contracts, monthly payroll, IRPF withholding, statutory contributions, benefits administration, and any dismissal proceedings, for the life of the employment relationship.

Entity setup makes financial sense above roughly 15 to 20 planned hires or when the business needs a local entity for tax, contracting, or IP reasons.

How to hire remote employees in Spain?

Hiring employees in Spain without a local entity means working through a licensed partner rather than a standalone EOR, since Spanish law doesn't treat EOR as its own legal category.

Companies use either an ETT (Empresa de Trabajo Temporal), a temporary employment agency licensed under Ley 14/1994, or a consultancy-style arrangement, depending on the role.

The licensed partner becomes the legal employer under Article 43 of the Workers' Statute, holds the Spanish employment contract, registers the worker with the Tesorería General de la Seguridad Social (TGSS), withholds IRPF (Personal Income Tax), and carries statutory employer liability. The client company still directs the employee's day-to-day work.

Key benefits

• Entity-free hiring: Companies can hire in Spain without establishing a local subsidiary or branch.
• Compliance support: Employment stays aligned with Spanish labor law through a licensed ETT or consultancy structure.
• Payroll support: Salary processing, tax withholding, and statutory contributions run through the licensed partner.
• Faster onboarding: Employees can be integrated with reduced administrative steps.
• Lighter administrative load: Employment administration and compliance responsibilities sit with the licensed partner rather than the client's internal team.

For companies evaluating this approach, Skuad supports hiring and workforce operations in Spain through its Temporary Employment Consultancy, an ETT-licensed and consultancy-based structure, so a business can hire in Spain without setting up 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

Customer story: How PureRED expanded across Europe (including Spain) with Skuad

PureRED, a US-headquartered marketing and advertising company, needed to build a distributed team across the UK, Spain, Croatia, Greece, Colombia, and India without setting up local entities in each market.

Skuad's EOR onboarded 65 employees across all six countries, with localized employment contracts, multi-currency payroll, and ongoing compliance across every jurisdiction, including Spain's Workers' Statute and TGSS registration.

"Skuad made our team expansion possible, handling the complex onboarding and payroll processes across six different countries with ease. Their local expertise ensured our compliance, letting us focus on what we do best - serving our clients." - Brian Butcher, EVP Corporate Development, PureRED

Read the full PureRED case study

EOR vs. entity setup in Spain: quick comparison

Hiring through an EOR partner is faster and cheaper for headcounts below 15 to 20 employees in Spain; a local entity becomes more cost-effective above that threshold. An EOR partner, structured in Spain as a licensed ETT or consultancy arrangement, onboards a first hire in one to two weeks with no upfront cost, and the partner itself takes on employer liability.

Setting up a Spanish entity takes three to six months, costs €10,000 to €25,000 upfront, and leaves the client company carrying full compliance responsibility under the Workers' Statute, applicable CBAs, and TGSS rules.

The right choice comes down to how permanent the Spain footprint needs to be. Companies planning fewer than 15 hires, testing product-market fit, or building a distributed team are better served by hiring through an EOR partner.

Companies committing to a long-term Spanish presence with local revenue, IP, or contracting needs justify the entity investment over a multi-year horizon.

What is the difference between an EOR partner and direct hiring in Spain?

An EOR partner fits companies hiring 1 to 15 employees in Spain without a local entity; direct hiring fits companies with 15 or more planned hires, an existing Spanish entity, or a specific need to sign local contracts, hold Spanish IP, or bill through a Spanish entity.

Direct hiring means your own company acts as the legal employer, which requires an incorporated Spanish entity, payroll infrastructure, and full compliance ownership under the Workers' Statute.

An EOR partner removes that requirement: in Spain, this works through a licensed ETT or a consultancy arrangement that takes on the legal employer role on your behalf.

When direct hiring makes sense

• You already have a Spanish entity or need one for tax, contractual, or regulatory reasons.
• You plan to hire 15 or more employees in Spain within 12 to 18 months.
• You need to sign local commercial contracts, hold Spanish IP, or bill Spanish clients through a local entity.
• You have internal HR, payroll, and legal capacity to run Spain operations directly.

When an EOR partner makes sense

• You want to hire one to fifteen employees without incorporating in Spain.
• You need to onboard talent in weeks, not quarters.
• You are testing product-market fit, running a pilot, or supporting a distributed team.
• You want to keep employer liability off your books until the Spain team justifies a local entity.

What does hiring an employee in Spain cost through a licensed employment partner?

The total cost of hiring in Spain through a licensed employment partner, an ETT or a consultancy arrangement, breaks down into three parts:

• The employee's gross salary
• Statutory employer contributions to social security
• The partner's platform fee.

Here is a worked example for a mid-level hire on a €45,000 gross annual salary.

Notes

• AT/EP rates vary by business activity code (CNAE). Office-based roles are near the lower end (1%); higher-risk roles carry higher rates.
• Employer contributions are calculated on the employee's monthly contribution base (base de cotización), which is capped at a statutory maximum. Salaries above the annual cap generate a lower effective employer contribution percentage.
• The Skuad platform fee shown is illustrative; confirm current pricing on the Skuad pricing page.
• Setting up a Spanish entity directly would add legal, incorporation, and ongoing accounting costs on top of the salary and contributions above.
• Rates sourced from Orden PJC/297/2026 (BOE), effective January 1, 2026.

Every Spain hire looks a little different. Use the Skuad employee cost calculator to work out the fully loaded cost of a Spain employee at any salary in seconds.

How to hire an employee in Spain: step-by-step guide

Hiring an employee in Spain follows eight steps:

1. Confirm your hiring model (entity or EOR)
2. Identify the applicable collective bargaining agreement (CBA)
3. Draft the employment contract
4. Collect employee documentation (NIE, DNI, IRPF Modelo 145)
5. Register with the TGSS
6. Set up payroll and IRPF withholding
7. Enroll in statutory benefits
8. Complete onboarding.

Step 1: Confirm your hiring model

Decide whether to set up a local entity or hire remote employees through an EOR based on headcount, timeline, and budget. This decision drives every step that follows.

Step 2: Identify the applicable collective bargaining agreement (CBA)

Almost every sector in Spain is covered by a CBA that sets minimum wages, working hours, allowances, and termination terms above the statutory baseline. Confirm the CBA that applies to the role before drafting the contract.

Step 3: Draft the employment contract

Choose between an indefinite or definite (fixed-term) contract. The contract must specify the role, salary, working hours, probation period, notice period, and reference the applicable CBA. Contracts must be in Spanish, or bilingual with Spanish as the governing language.

Step 4: Collect employee documentation

You will need the employee's NIE (Foreigner Identification Number) or DNI (National ID), Spanish social security number, bank account details, and IRPF withholding form (Modelo 145).

Step 5: Register the employee with the TGSS

Before the employee's first day, register them with the General Treasury of the Social Security System (Tesorería General de la Seguridad Social) using Form TA.2/S. This step is legally required and cannot be backdated.

Step 6: Set up payroll and IRPF withholding

Configure gross-to-net calculations, IRPF income tax withholding based on the employee's personal circumstances (Modelo 145), and monthly social security contribution filings.

Step 7: Enroll the employee in statutory and supplemental benefits

Statutory coverage runs through the public social security system. Add any supplemental benefits your company offers (private health, meal vouchers, pension) at this stage.

Step 8: Complete onboarding and issue equipment

Provide the employee handbook, health and safety training required under Spanish law, company equipment, and access to internal systems.

What are the types of visas in Spain?

Spain offers six main visa categories

1. The Schengen short-stay visa (up to 90 days)
2. Work visa
3. Student visa
4. Family reunification visa
5. Non-lucrative visa
6. Digital nomad visa

Each has its own eligibility rules and application process, administered by Spanish consulates under the Ministry of Foreign Affairs.

Who needs a visa?

EU, EEA, and Swiss citizens do not need a visa to live or work in Spain. All other nationals need one, with the exception of Schengen visa-waiver country passport holders, who can visit for up to 90 days without a visa. Working or living in Spain long-term requires a long-stay visa and, where applicable, a residence authorization.

What are the work permit requirements in Spain?

A Spanish work permit and its associated work visa require the same core documents:

1. A valid passport
2. Completed national visa application form
3. Passport-sized photographs
4. An employment contract from a Spanish employer
5. Approved work authorization from the Spanish immigration authorities.

Processing time varies by permit category, documentation completeness, and consulate workload.

Documents required

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

Employers hiring international talent may also need to comply with 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 tax requirements in Spain?

Employers in Spain must file monthly social security contributions to the TGSS (roughly 31.65% of gross salary), withhold IRPF income tax from employee salaries at progressive rates from 19% to 47%, and pay corporate income tax at 25%. VAT is charged at a standard 21% on taxable goods and services.  

What are the employer tax obligations in Spain?

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 payroll taxation

Employee payroll taxation

How is payroll managed in Spain?

Payroll in Spain runs on a monthly cycle. Employers calculate gross pay, deduct IRPF income tax and employee social security contributions, pay net salary in euros, issue a payslip, and file the withheld amounts with the TGSS and Agencia Tributaria each month. Companies handle this in-house, through a local payroll provider, or through an EOR that runs the full cycle.  

How to pay?

Spanish payroll follows a five-step monthly cycle:

1. Collect the new hire's employment and tax details
2. Calculate gross pay based on hours worked and contracted rate
3. Deduct IRPF income tax and employee social security to reach net pay
4. Issue a compliant payslip in euros and retain records for four years
5. Forward the withheld amounts to the Agencia Tributaria and TGSS by the required monthly deadlines.

Best ways to pay employees in Spain

There are three main ways to run payroll in Spain:

1. In-house with a dedicated team
2. Through a local payroll provider
3. Through an EOR that manages payroll as part of full employer-of-record service.

Each option carries a different split of control and compliance responsibility, so here's what each one actually involves:

• 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.

How do probation and termination work in Spain?

Probation periods in Spain are set by the applicable collective bargaining agreement (CBA). Without a CBA, the statutory maximum is six months for technical graduates or qualified specialists and two months for all other roles. Permanent, training, and special employment contracts follow their own separate probation rules.

• 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.

What are the rules for terminating an employee in Spain?

Termination in Spain works differently by dismissal type:

• Objective dismissals (for economic, structural, or organizational reasons) require 15 days' notice plus severance of 20 days per year of service
• Unfair dismissals owe 33 days per year of service
• Disciplinary dismissals require neither notice nor severance if the misconduct is proven.

Employees resigning must give 2 to 3 weeks' notice, depending on the CBA.

What does the offboarding process involve in Spain?

Offboarding an employee in Spain involves six steps:

1. Notifying internal departments of the departure
2. Conducting an exit interview
3. Transferring responsibilities and returning equipment
4. Revoking access to company systems
5. Issuing final payments and settlement documentation
6. Updating employee records with the TGSS.

Final settlement (finiquito) must be issued in writing and cover any unpaid salary, unused vacation, and applicable severance.

How do PEO services work in Spain?

A Professional Employer Organization (PEO) in Spain operates under a co-employment model. The PEO supports payroll, benefits, and HR administration, while the client company remains the legal employer and must have a Spanish entity. An EOR acts as the legal employer, so companies without a Spanish entity can hire through an EOR but not through a PEO.

Under a PEO arrangement, the client keeps employer liability under the Workers' Statute and the applicable CBA, while the PEO handles day-to-day HR admin. For companies without a local entity, an EOR is the compliant route because it holds the Spanish employment contract, files with the TGSS, and takes on statutory employer responsibility.

What happens if you hire in Spain without an EOR partner?

Hiring in Spain without a compliant employment structure means your company carries full employer liability directly, whether through a registered Spanish entity or, in narrower cases, a genuinely independent contractor relationship. Getting either wrong exposes your company to Labor Inspectorate audits, backdated payroll taxes, social security arrears, and personal liability for directors under Spanish law.

The four most common failure modes are outlined below:

1. Hiring the person as a contractor when the relationship is actually employment

Spain applies a substance-over-form test. If the "contractor" works fixed hours, uses your tools, reports to your managers, or earns most of their income from your company, the Labor Inspectorate can reclassify them as an employee.

The client owes backdated IRPF withholding, employer and employee social security contributions (up to four years back), interest, and penalties of up to 150% of the unpaid amounts under LISOS.

2. Using a foreign entity to employ someone based in Spain

Paying a Spain-based worker from a UK, US, or other foreign payroll does not make the arrangement compliant. Spain treats the worker as a Spanish employee for tax and social security purposes regardless of where the payroll runs.

The foreign company can be treated as having a permanent establishment (establecimiento permanente) in Spain, triggering corporate income tax, VAT registration, and full employer obligations under the Workers' Statute.

3. Setting up a Spanish entity and getting the CBA wrong

Almost every sector in Spain is covered by a collective bargaining agreement that sets minimum pay, working hours, allowances, and probation terms above the statutory baseline.

Applying the wrong CBA, or ignoring it, means back pay claims from employees, fines from the Labor Inspectorate, and unenforceable contract terms. This is one of the most common issues flagged in Spanish labor inspections.

4. Engaging a provider that presents itself as an EOR without the underlying Spanish license

Since Spanish law doesn't recognize a standalone EOR model, any provider marketing itself as one still needs a genuine structure underneath, either a licensed ETT with active TGSS employer registration and its own payroll infrastructure, or a properly structured consultancy arrangement. If that underlying structure isn't real, the arrangement can be treated as illegal labor leasing (cesión ilegal de trabajadores) under Article 43 of the Workers' Statute.

The cost of getting Spanish employment wrong results in:

1. Back-payroll taxes
2. Social security arrears
3. Statutory severance
4. LISOS fines
5. Legal fees and reputational damage from a public Labor Inspectorate ruling

Working with a licensed employment partner, an ETT or a genuine consultancy arrangement, helps reduce these risks by taking on the legal Spanish employer role with real operating infrastructure, keeping employer liability off your books.

Implications of illegal labor leasing in Spain (cesión ilegal de trabajadores)

Spain has some of the strictest anti-labor-leasing rules in the European Union, governed by Article 43 of the Workers' Statute. Illegal labor leasing (cesión ilegal de trabajadores) occurs when a company uses workers who are formally employed by another entity that has no genuine business activity, insufficient operational infrastructure, or does not act as a real employer.

A compliant employment structure, a licensed ETT, or a genuine consultancy arrangement stays outside this definition because the partner is a licensed, operating employer in Spain with its own payroll infrastructure, tax registrations, and employment liability.

An arrangement crosses the line when the third-party "employer" is effectively a shell used to route workers to a client, without acting as a real employer.

Penalties and consequences

• Thousands of euros per case, depending on severity.
• Workers can be reclassified as employees of the client (user) company, with full seniority and rights.
• Both the "formal" employer and the user company are jointly and severally liable for unpaid wages, social security contributions, and benefits.
• Repeat or aggravated cases can lead to loss of eligibility for public tenders and public subsidies.
• The Labor Inspectorate (Inspección de Trabajo) can trigger an audit that reaches beyond the flagged workers.

How a compliant employment structure avoids this

• Licensed and operating Spanish entity (ETT or consultancy) with real HR, payroll, and compliance infrastructure.
• Direct employment contracts under the applicable CBA, filed with the TGSS in the partner's name.
• Statutory contributions and IRPF withholding paid by the partner as the legal employer.
• Clear scope where client directs the work; the partner holds the employment relationship.

Before signing with any employment partner in Spain, confirm they hold genuine ETT licensing (or operate as a properly structured consultancy), maintain a local presence, are registered with the TGSS as an employer, and can demonstrate operational infrastructure beyond just a payroll pass-through. This is the single most important compliance check for the Spanish market.

Hire remote employees in Spain without entity setup

You can build a team in Spain without setting up a local entity by hiring through a licensed employment partner. Skuad supports this through its Temporary Employment Consultancy, an ETT-licensed and consultancy-based structure in Spain, which holds the employment contract, files IRPF withholding and TGSS contributions, and takes on statutory compliance under the Workers' Statute and applicable CBA. Your company directs the day-to-day work; the licensed partner carries the employer liability.

This route fits companies making one to fifteen hires, testing the Spanish market, or scaling a distributed team before committing to entity setup. First hires go live in one to two weeks with no upfront incorporation cost.

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 isn't its own legal category. Compliant hiring instead runs through a licensed ETT (Empresa de Trabajo Temporal) or a consultancy arrangement, which acts as the legal employer, supports payroll processing, applies IRPF income tax withholding, completes TGSS social security registration, and stays compliant with the Workers' Statute and applicable collective bargaining agreements. The client company continues to direct the employee's day-to-day work.

2. Why do companies use an EOR partner in Spain?

Setting up a Spanish entity takes three to six months and involves incorporation, notary, tax registration, and TGSS setup costs that often reach €10,000 to €25,000 upfront. Companies work with a licensed ETT or consultancy partner instead to skip that timeline and start hiring in Spain within one to two weeks. It suits teams making one to fifteen hires, running a market pilot, or expanding into Spain before committing to a permanent local footprint.

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

Foreign companies can hire in Spain without a local entity by working through a licensed ETT (Empresa de Trabajo Temporal) or a consultancy arrangement, since Spain doesn't recognize standalone EOR as its own legal category. The licensed partner acts as the legal employer, holds the Spanish employment contract, and takes care of TGSS registration and tax filings. The client company keeps control of daily work. This route suits companies making one to fifteen hires or testing the Spanish market.

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

Spain has strict rules against improper labor leasing (cesión ilegal de trabajadores) under Article 43 of the Workers' Statute. Since Spain doesn't recognize standalone EOR, this risk applies when a provider lacks a genuine ETT license or consultancy structure. Incorrect worker classification, misuse of contract types, or engaging a provider without real Spanish presence can trigger labor inspections, financial penalties, joint liability for unpaid wages and social security contributions, and worker reclassification. Applying the relevant collective bargaining agreement is required.

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

A PEO in Spain requires the client company to already hold its own Spanish entity, since the client remains the formal legal employer while the PEO administers HR and payroll. A licensed ETT or consultancy partner removes that requirement by acting as the legal employer, letting foreign companies hire without incorporating first. In practice, a PEO suits companies with an existing Spanish entity, while a licensed ETT or consultancy arrangement suits companies without one.

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

Onboarding through a licensed ETT or consultancy partner 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. Local hires move fastest when the employee's NIE, bank details, and IRPF withholding form (Modelo 145) are ready before the process begins. Foreign national hires take longer since work permit approvals add extra time.