Payroll in Spain: A Comprehensive Guide for 2026

Introduction

Payroll in Spain operates under the Workers' Statute and the General Social Security Law, with contributions collected monthly by the Tesorería General de la Seguridad Social (TGSS) through Sistema RED. Employers register each employee before their first working day, withhold personal income tax (IRPF) at source, and issue a payslip on the approved model.

Foreign companies run payroll in Spain in one of three ways. You can incorporate and process it in-house, register with the TGSS as a non-resident employer and keep the filings, or work with an employer of record that holds the contract locally. The first two leave you tracking convenio colectivo rates, withholding scales that differ by autonomous community, and rate changes that land backdated.

In this guide, we walk through the payroll process, contribution rates, income tax withholding, statutory leave, and what most often catches foreign employers. Each section gives the rates and deadlines you need to price a Spanish hire and run the cycle correctly.

What does the payroll process in Spain involve?

When you employ workers in Spain, you have to run a Spanish payroll process. This process typically involves:

• Collecting employee information, including their national identity document (DNI for Spanish nationals, NIE for foreign nationals), their social security affiliation number, and a completed Modelo 145 declaring the personal circumstances that set their income tax withholding rate
• Calculating gross pay, which for salaried staff follows the professional category and pay scale set in the applicable collective agreement, plus the accrued share of any extra payments
• Calculating net pay, which is gross pay minus personal income tax (IRPF) withholding and the employee's share of social security contributions
• Paying your workers, issuing a payslip on the official model approved by the Ministry of Labour unless your collective agreement sets an alternative, and keeping those records for four years
• Transferring deductions to the relevant authorities, since the employer files and pays its own contributions alongside the income tax and social security amounts withheld from employees

This basic payroll workflow can be applied to most countries. However, when you start delving into the details, it’s clear that no two countries share the same payroll process.

For example, every employee in Spain is entitled to at least two extraordinary bonus payments a year under Article 31 of the Workers' Statute, one of them at Christmas and the second in a month fixed by the applicable collective agreement.

Employer social security runs to around 30.65% of the contribution base, plus a variable occupational accident rate set by the job's risk classification, all of it paid to the Tesorería General de la Seguridad Social.

What do you need to know about payroll in Spain?

A few Spain payroll basics

The currency in Spain is the Euro (€, EUR). Employers pay salaries at a fixed periodic date, and the interval for regular pay cannot exceed one month. Payment on the last working day is common practice, though the exact date usually comes from the collective agreement or the contract.

Working hours in Spain

The statutory maximum in Spain is 40 hours of effective work per week, averaged across the year under Article 34 of the Workers' Statute, so a longer week can be offset by a shorter one within the same reference period.

Daily schedules come from the applicable collective agreement and vary widely by sector. A split day with a long midday break remains common in retail and hospitality, while most office employers now run a continuous day with a shorter lunch break.

Overtime rules in Spain

Overtime is any work beyond the maximum ordinary working time, measured as an annual average. Under Article 35 of the Workers' Statute, the collective agreement or the individual contract chooses between paying overtime at a rate no lower than the ordinary hourly rate and compensating it with equivalent paid rest. Where nothing has been agreed, the hours have to be compensated with rest within four months.

An employee can work a maximum of 80 overtime hours per year. Hours compensated with rest within four months, and hours worked to prevent or repair extraordinary damage, sit outside that cap.

Minimum wage requirements in Spain

The minimum wage in Spain for 2026 is €1,221 per month across 14 payments, or €17,094 gross per year, set by Royal Decree 126/2026 with retroactive effect from 1 January. Employers who prorate the two extra payments across 12 monthly instalments pay at least €1,424.50 per month. The extra payments fall at Christmas and in a second month fixed by the applicable collective agreement. Note that a collective agreement can set a higher floor than the statutory minimum, and where it does, the agreement governs.

Severance pay in Spain

Objective dismissals require at least 15 days' notice, and an employer that misses it pays the wages the employee would have earned during that period. Disciplinary dismissals carry no notice requirement, though they follow their own formal procedure.

Severance for an objective dismissal is 20 days' salary per year of service, capped at 12 monthly payments. A dismissal found unfair carries 33 days' salary per year of service, capped at 24 monthly payments, with service accrued before 13 February 2012 calculated at 45 days per year.

What are the employer and employee contribution rates in Spain?

As part of Spain's payroll statutory requirements, employers and employees both contribute to social security. Contributions apply to the contribution base, which for 2026 runs from €1,424.40 to €5,101.20 per month, and earnings above that ceiling attract a separate solidarity contribution.

Employer contributions

• 23.6% common contingencies
• 5.5% unemployment on permanent contracts, 6.7% on fixed-term contracts
• 0.2% wage guarantee fund (FOGASA)
• 0.6% professional training
• 0.75% intergenerational equity mechanism (MEI)
• A variable occupational accident rate set by the company's activity classification, paid by the employer alone

Employee contributions

• 4.7% common contingencies
• 1.55% unemployment on permanent contracts, 1.6% on fixed-term contracts
• 0.1% professional training
• 0.15% intergenerational equity mechanism (MEI)

Income tax

Income tax in Spain is charged at progressive rates, and what an employee actually pays is the sum of a state scale and the scale approved by their autonomous community. Every autonomous community has been required to approve its own schedule since 2010, so the total rate depends on where the employee is resident.

The Basque Country and Navarre operate separate regimes of their own. The scale below is the state withholding scale, which works as a guideline, and you apply the relevant regional scale on top of it to reach the total.

State withholding scale for general taxable income

Gross salary is only part of the number. Employer social security in Spain adds roughly 30 to 33 percent on top, and the exact figure moves with the occupational accident rate for the role and whether the salary crosses the maximum contribution base.

Use the employee cost calculator to model total cost of employment for a Spain hire

How much paid leave do employees in Spain get?

Public holidays

Spanish workers get 14 paid public holidays per year. Some of these public holidays vary between regions.

Paid leave

All full-time workers are entitled to a minimum of 30 calendar days of paid annual leave, which works out at roughly 22 working days. Collective agreements often improve on that floor.

Sick leave

• Common illness or non-work-related injury: the benefit is 60% of the regulatory base from day four to day 20, rising to 75% from day 21. The first three days are unpaid unless the collective agreement provides otherwise.
• Occupational disease or work-related injury: the benefit is 75% of the regulatory base from the day after the leave begins. The day of the accident itself is paid by the employer as an ordinary working day.

Sick pay can run for a maximum of 365 days, extendable by a further 180 days where recovery is expected within that period. The employer bears the cost from day four to day 15. From day 16 the National Institute of Social Security or the collaborating mutual insurer funds the benefit, though the employer normally keeps paying it through payroll and offsets the amount against its monthly social security contributions.

Birth and childcare leave

Spain has a single, gender-neutral entitlement called birth and childcare leave, which replaced separate maternity and paternity leave in 2019. Since Royal Decree-Law 9/2025, each parent in a two-parent family is entitled to 19 weeks, and a sole parent in a single-parent family to 32 weeks. The entitlement is individual and non-transferable, so unused weeks cannot pass to the other parent.

The leave splits into three parts: six uninterrupted weeks immediately after the birth or the adoption or fostering decision, a further 11 weeks that can be taken flexibly until the child turns 12 months, and two more weeks that can be taken any time until the child turns eight. Single parents get 28 flexible weeks in the first year and four deferrable weeks.

The same rules apply to adoption, guardianship, and fostering. Social security pays the benefit directly at 100% of the regulatory base, so the employer carries no wage cost during the leave.

Nursing leave

Either parent can take nursing leave in addition to birth and childcare leave. They can either:

• Take one hour off each day, which can be split into two fractions, until the child is nine months old
• Accumulate these hours to take full working days as paid leave

Employers pay for this leave. Where both parents take it on equal terms it can extend to 12 months, with a social security benefit covering the period from the ninth month.

Other leave allowances

Employees are entitled to:

• Up to two years of unpaid leave to care for a seriously ill family member, or up to three years for a child
• Five days' paid leave for a serious accident, serious illness, hospitalisation, or outpatient surgery requiring home recovery affecting a spouse, registered partner, relative up to the second degree, or anyone living in the same household
• Two days' leave following the death of a spouse, registered partner, or relative up to the second degree, rising to four if travel is required
• Four days' paid leave per year for urgent, unforeseen family reasons where the employee's immediate presence is needed
• Up to eight weeks of parental leave to care for a child until they turn eight, taken continuously or in blocks, full-time or part-time
• One day's leave for moving house
• 15 calendar days' leave for marriage or for registering a domestic partnership
• Paid leave for public duties, for example serving as a local councillor or school governor

What does payroll compliance in Spain involve?

Running payroll in Spain is less about the calculation and more about the inputs. Gross pay, employer cost, and withholding all depend on variables that sit outside the Workers' Statute: the collective agreement covering your sector, the region your employee lives in, and the activity code your company is registered under.

Rates also move mid-year with retroactive effect, which means a correct January payroll run can become incorrect in February. These are the issues that catch foreign employers most often.

• Collective agreements set the real floor. A convenio colectivo negotiated at sector, regional, or company level can set higher pay scales, overtime rates, and leave than the statutory minimum, and where it does, its terms govern. Employers who budget off the national minimum wage frequently underpay.
• Rate changes arrive backdated. The 2026 minimum wage was approved on 17 February and published the next day, with effect from 1 January. Employers who had already run two payroll cycles had to recalculate, pay arrears, and adjust contribution bases retrospectively.
• Employer cost varies by role. Fixed employer contributions come to 30.65% of the contribution base, plus a variable occupational accident rate tied to your registered activity, roughly 1.50% for office work and higher in construction. Contributions apply to a base capped at €5,101.20 per month, and salary above that attracts a separate solidarity contribution.
• Withholding depends on where the employee lives. Income tax is the sum of a state scale and one set by the employee's autonomous community, and every community has been required to approve its own since 2010. Two employees on identical contracts in different regions need different withholding rates, and the Basque Country and Navarre run separate regimes entirely.
• The filing calendar carries fixed surcharges. Contributions are filed monthly through Sistema RED, and payroll records are kept for four years. Missing a payment deadline costs 10% of the debt in the first calendar month and 20% from the second, rising to 35% where the filing obligation was also missed.

Payroll compliance in Spain runs on a fixed calendar. Employees have to be registered with the General Treasury of Social Security before their first working day, contributions are filed monthly through Sistema RED, personal income tax (IRPF) withholding is reported on Modelo 111 and summarised annually on Modelo 190, and payroll records are kept for four years. Serious infractions under the Law on Infractions and Sanctions in the Social Order carry fines from €751 to €7,500 per affected worker, before back pay and surcharges.

Skuad helps with this through local infrastructure, so your finance team is not tracking filing windows or statutory rate changes independently.

Here is what Skuad helps with:

• Supports statutory contribution workflows across supported markets, covering applicable social insurance, unemployment, and training obligations
• Supports payroll processing in 70+ currencies with tax withholding and statutory deductions applied at source
• Helps maintain payslip documentation and payroll records in line with local retention requirements across supported markets
• Assists with monitoring statutory rate and regulatory changes as they take effect in supported markets
• Supports employment contract generation across 160+ countries, aligned with local labor laws and statutory requirements

For a team with a handful of employees in one market, the filing calendar is the part that quietly consumes finance time every month.

Customer story: How PureRED onboarded 65 employees across six countries with Skuad

PureRED is an integrated marketing and advertising agency serving large retail and consumer brands. The team needed to onboard 65 employees across the UK, Spain, Croatia, Greece, Colombia, and India, each with its own labor code and payroll rules, without running six entity setups in parallel. Skuad supported localized employment contracts, multi-currency payroll, and ongoing compliance across all six markets from a single platform. PureRED now runs its distributed team through Skuad's EOR platform.

"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 case study

Run payroll in Spain without setting up an entity

Running payroll in Spain in-house means your existing HR team learns Spanish labor law, the 14-payment salary structure, regional IRPF variation, and Sistema RED filing on top of their current workload. Splitting it across a local Spanish payroll vendor and an internal process for everyone else leaves two systems to reconcile each month.

Skuad helps consolidate that into a single global payroll platform.

Skuad supports employment contracts, statutory contribution filings, payroll in 70+ currencies, statutory benefits, and payslip documentation, so your team is not rebuilding a Spanish payroll function from scratch.

Companies across SaaS, marketing, logistics, and technology use Skuad to support hiring in Spain and across 160+ countries, keep pace with statutory rate changes, and run one payroll cycle rather than one per market.

Book a demo to see how Skuad supports your first Spain hire

FAQs

1. What is payroll in Spain?

Payroll in Spain covers gross-to-net calculation, personal income tax (IRPF) withholding, and social security contributions remitted monthly to the General Treasury of Social Security (TGSS). Employers register with the Agencia Tributaria and the TGSS before the first hire, issue monthly payslips, and retain payroll records for four years.

2. Are 13th and 14th month payments mandatory in Spain?

Most employees in Spain receive 14 salary payments per year, with the extra two typically paid in July and December. Collective agreements or individual contracts can generally allow these to be prorated across 12 monthly payments, provided total annual pay stays unchanged.

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

Foreign companies can generally pay employees in Spain without incorporating, either by registering directly with the TGSS as a non-resident employer or by working with an employer of record that holds the employment contract and files contributions with Spanish authorities on the company's behalf.

4. What are the penalties for payroll non-compliance in Spain?

Penalties vary by severity under the Law on Infractions and Sanctions in the Social Order (LISOS). Serious wage infractions generally range from 751 to 7,500 euros per affected worker, and late social security payments usually attract surcharges plus interest on the outstanding amount.

5. Should payroll in Spain be run in-house or outsourced?

This usually depends on headcount and whether a Spanish entity already exists. In-house payroll generally suits employers with local finance staff and Sistema RED access, while outsourcing tends to suit teams hiring a small number of employees remotely without a registered presence.

6. Do collective bargaining agreements affect payroll in Spain?

Collective bargaining agreements, known as convenios colectivos, usually set pay scales, overtime rates, and leave terms above the statutory floor in Spain. Employers generally need to identify the agreement covering their sector and region, since its terms typically override the defaults in the Workers' Statute.