Hire a Remote Team in Spain: A Comprehensive Guide for 2026

Introduction

Hiring a remote team in Spain requires a legal employer registered with the Tesorería General de la Seguridad Social (TGSS), staying compliant with the applicable collective bargaining agreement (CBA) selected from more than 5,000 active convenios colectivos, and Impuesto sobre la Renta de las Personas Físicas (IRPF) income tax withheld from every monthly payslip.

Foreign companies without a Spanish entity must work through an Employer of Record (EOR) or Agent of Record (AOR), since the Workers' Statute (Estatuto de los Trabajadores) requires a legal employer in place before any payroll can run.

The compliance costs compound quickly. Employer social security contributions run at approximately 30.65% of the monthly contribution base, mandatory 14-salary payments add roughly 16.7% to the annual payroll budget, and the 2021 labor reform restricted fixed-term contracts to two documented circumstances.

Unfair dismissal carries severance of 33 days per year of service, capped at 24 months.

This guide covers Spain's hiring options, employment laws, payroll obligations, leave entitlements, compliance risks, and costs.

How to hire in Spain?

There are three main ways in which you can hire people in Spain. They include,

Option 1: Setting up a local entity

Setting up a local entity is one of the most traditional methods of hiring employees in a foreign country. It involves establishing a formal business presence in Spain and complying with local labor laws.

However, the process usually demands proper management resources and can be extremely expensive and time-consuming.

Option 2: Hire employees via EOR

An EOR, or Employer of Record, acts as a legal employer on your behalf and provides the local knowledge and expertise to navigate the local employment regulations in Spain.

You can partner with an EOR provider to help you with global hiring. This eliminates the need for a local entity.

Option 3: Hire contractors via AOR

An AOR or agent of record is usually one of the most sought-after options when hiring and managing international contractors.

They deal with all legal and compliance matters, including payouts and classifications, and help you stay compliant with local labor laws.

Most companies hiring in Spain choose one of two options: full-time employees or independent contractors. As they grow, many use both, which means they have to follow two different sets of rules.

Skuad supports both hiring models from a single platform:

EOR for full-time employees

• Acts as the legal employer across 160+ countries, so you can hire without setting up a local entity
• Supports employment contract generation aligned with local labor laws across supported markets
• Facilitates statutory contribution workflows covering applicable social insurance and pension obligations
• Supports payroll processing in 70+ currencies with tax withholding and year-end reconciliation
• Helps administer statutory benefits, paid leave, and parental entitlements in line with local requirements
• Assists with termination and offboarding, including notice periods and severance calculations as required locally

Contractor management (AOR)

• Helps onboard contractors with locally compliant agreements that reduce misclassification exposure
• Supports invoice generation, approval workflows, and payment processing across supported markets
• Helps flag worker classification risk before it becomes a compliance issue with built-in checks
• Facilitates multi-currency payouts across 70+ currencies with no manual reconciliation
• Helps manage contractor records, contracts, and payment history from a single dashboard alongside full-time employees

See Skuad pricing for full-time and contractor hiring in Spain.

What are the employment laws in Spain?

Spain's employment law framework draws from the Spanish Constitution, collective bargaining agreements (convenios colectivos), and the Workers' Statute (Estatuto de los Trabajadores), Royal Legislative Decree 2/2015.

Collectively, these sources govern every aspect of the employer-employee relationship.

As is quite visible, the labor laws of Spain cover every crucial aspect of the employee-employer relationship. More often than not, this can be challenging for you when hiring in Spain.

Before you hire in Spain, get the full picture on contracts, probation rules, public holidays, and termination procedures.

Explore Skuad's Spain hiring guide.

What is payroll tax in Spain?

In addition to the employment laws, Spain also has an intricate payroll system, compliance with which is of the utmost necessity for all employers.

It includes provisions such as the following:

• Employees in Spain are entitled to 13th and 14th pay, usually disbursed during the Summer and Christmas holidays.
• The amount equates to 1/14th of the total annual salary of the employee.
• Additionally, employers and employees must contribute to the social security system in Spain.
• Social security contributions in Spain are calculated as a percentage of each employee's monthly contribution base. For 2026, the minimum contribution base is €1,381.20/month, and the maximum is €5,101.20/month.

The employer's total contribution rate is approximately 30.65% of the contribution base for indefinite contracts. The employee's contribution rate is approximately 6.5% of the contribution base. Contributions are paid monthly to the Tesorería General de la Seguridad Social (TGSS).

Spain's minimum wage sets the floor. Actual salary benchmarks vary significantly by role, seniority, and sector, and getting them wrong affects both hiring outcomes and CBA compliance.

Check real-time salary benchmarks for Spain across roles and seniority levels

Spain payroll tax rates

Employer taxation

Employee taxation

Spain's payroll system requires managing IRPF income tax withholding, TGSS social security contributions at approximately 30.65% of the contribution base, a mandatory 14-payment salary structure, monthly SILTRA (Sistema de Liquidación Directa, an electronic platform and application managed by the Spanish Social Security) electronic filings, and an annual Form 190 declaration, all while staying current with updates from the Ministerio de Trabajo y Economía Social (the Spanish government department responsible for labour relations, employment policy, and the promotion of the social economy).

For foreign employers without local payroll infrastructure, late or incorrect filings can result in penalties and fines.

Skuad facilitates payroll administration for companies hiring across supported markets, without requiring a local payroll team or Spanish incorporation.

Here is what Skuad facilitates:

• Payroll processing in 70+ currencies with automated tax withholding and statutory deductions
• Statutory contribution workflows across supported markets, covering applicable social insurance and pension obligations
• Payroll compliance support covering locally mandated payment frequencies and supplementary salary structures across supported markets
• Consolidated payroll management across 160+ countries, with all employee payments processed from a single platform
• Automated payroll reconciliation and compliance documentation across supported markets

Explore Skuad's global payroll solution for Spain.

What are the leave benefits in Spain?

Spain's leave framework sits in the Workers' Statute (Estatuto de los Trabajadores), Royal Legislative Decree 2/2015, with specific entitlements governed by Article 37 (special paid leave and public holidays) and Article 38 (annual leave).

Collective bargaining agreements (convenios colectivos) can set more generous entitlements than the statutory baseline, but never less.

Annual leave

The annual paid holiday period will be no less than 30 calendar days. For full-time employees, this works out to approximately 22 working days.

Annual leave accrues from the first day of employment and is prorated for contracts under one year. Dates are set by mutual agreement between the employer and employee. The employee must receive at least two months' advance notice of the confirmed schedule.

Annual leave cannot be exchanged for a cash payment during an active employment relationship; the only exception is upon contract termination, where unused days are settled in the final payslip.

Many collective bargaining agreements grant 25 or more working days, so always check the applicable CBA for the role and sector.

Public holidays

Employees are entitled to 14 public holidays per year, which are paid and non-recoverable. These 14 days comprise 8 national public holidays set by the central government, 2 regional public holidays determined by each autonomous community, and 2 local (municipal) public holidays chosen by each city or town.

When a public holiday falls on a Sunday, the relevant authority typically designates a substitute working day. Public holiday schedules vary by region. Employees in Catalonia, the Basque Country, and other autonomous communities observe different regional dates, so payroll calendars must be set at a regional level, not just nationally.

Sick leave

Sick leave in Spain operates on a shared cost model between the employer and the Social Security system (Instituto Nacional de la Seguridad Social, or INSS).

The first three days of absence are typically unpaid unless a collective bargaining agreement provides otherwise. From day 4 to day 15, the employer is required to pay the benefit, which amounts to 60% of the employee's contribution base.

From day 16, the INSS takes over payment at 60% of the contribution base through day 20, rising to 75% from day 21 onwards.

Employees must provide a medical certificate, and failure to report an absence within the required timeframe can affect benefit eligibility.

Birth and childcare leave

Spain has unified maternity and paternity leave into a single "birth and childcare" entitlement (prestación por nacimiento y cuidado de menor), giving both parents equal rights.

Royal Decree-Law 9/2025 of July 29, extending birth and care leave, applies to births, adoptions, and fostering occurring on or after July 31, 2025, and adds at least one additional week of leave, with two additional weeks for single-parent families.

The base entitlement is 16 weeks per parent. The first six weeks immediately following birth are mandatory for both parents; the remaining weeks can be taken flexibly at any point until the child turns 12 months. The benefit is paid at 100% of the contribution base and funded entirely by the INSS (not an employer cost).

Special paid leave

Special paid leave is regulated in Article 37, Section 3 of the Workers' Statute. The following entitlements apply:

Marriage or registered partnership: 15 calendar days.

Serious illness or hospitalization of a relative: Employees can take 5 days off for an accident, serious illness, hospitalization, or surgery that requires home rest for a spouse, registered partner, close relative up to the second degree, a blood relative of a registered partner, or someone you live with.

Death of a relative: 2 working days for the death of a spouse, unregistered domestic partner, or a relative up to the second degree. This extends to 4 working days if the employee must travel to a different locality.

Menstrual leave

Employees in Spain who experience disabling menstrual periods are entitled to the duration of the disabling episode, as certified by a physician, upon provision of a medical certificate.

This leave is paid by Social Security from the first day of certified incapacity, at the temporary disability rate.

Breastfeeding and childcare

Employees in Spain are entitled to one hour per day away from work for breastfeeding or childcare until the child is nine months old. This hour can be split into two 30-minute intervals or accumulated into equivalent full days off, as agreed with the employer.

Unpaid parental leave

Employees with at least one year of tenure can request an unpaid leave of absence of up to three years to care for a child. Voluntary leave of absence regulated in Article 46.2 of the Workers' Statute allows employees with at least one year of tenure to take between four months and five years off without pay, with a preferential right to return to a position of equivalent rank.

During the first year of childcare, the employee's position is reserved. After the first year, they retain the right to return to a role of equivalent category and pay. This period counts toward Social Security pension accrual for up to three years.

What are the challenges of hiring in Spain?

Spain has strong worker protections and an actively enforced labor framework. For foreign companies hiring without a local entity or in-house Spanish compliance expertise, the challenges are in the following six areas.

Collective bargaining agreement compliance

Spain has over 5,000 active collective bargaining agreements (CBA), operating at both sector and company levels, and they cover approximately 90% of employed workers.

Identifying the correct CBA for a role is a mandatory step before drafting any employment contract. The CBA must appear in the contract itself under the written disclosure rules introduced by Royal Decree Law 32/2021.

Failing to apply the right CBA may result in the employer having to back-pay claims, labour inspection fines, and disputes over contract validity.

CBAs can set wages, working hours, notice periods, and leave entitlements above the Workers' Statute minimum, but never below it, so any contract that applies the statutory minimum without checking whether a CBA mandates more is non-compliant by default.

Worker misclassification

Spanish labor courts assess the substance of the working relationship, not the label on the contract. An individual who is contracted as an independent professional who works exclusively for one company, follows a fixed schedule, and uses company equipment is likely to be reclassified as an employee upon inspection.

If misclassification is found, the company owes back social security contributions at approximately 30.65% of the contribution base for the full period of the relationship, plus unpaid employee contributions, statutory benefits, severance, and interest.

The Inspección de Trabajo y Seguridad Social (Labour and Social Security Inspectorate) has significantly increased targeted audits of contractor arrangements since 2022, particularly in tech, media, and professional services sectors.

Fixed-term or definite contract restrictions

A fixed-term contract is now only valid in two circumstances: a documented temporary spike in production demand (capped at six months, extendable to twelve months under a sector CBA), or replacement of a worker with a protected right to return.

Any fixed-term contract used outside these two grounds is automatically treated as an indefinite contract, with full termination protections applying immediately.

Repeated fixed-term contracts without valid grounds carry an additional financial levy on the employer's unemployment contribution, raising it from 5.50% to 6.70% of the contribution base.

Working time recording

All employers in Spain must maintain a daily record of each employee's specific start and end times, regardless of whether the employee works on-site or remotely.

Records must be kept for a minimum of four years and be available to employees, their legal representatives, and the Inspección de Trabajo (Labour and Social Security Inspectorate) on demand.

Non-compliance is classified as a serious infringement under the Spanish Labour Infringements and Sanctions Act (Ley de Infracciones y Sanciones en el Orden Social, LISOS), with fines ranging from €626 to €6,250 per affected worker.

Social security and payroll filing obligations

Every employer must register with the Tesorería General de la Seguridad Social (TGSS) before a worker's first day of employment. Any late registration, even by one day, creates a contribution gap that carries penalties.

Monthly social security filings run through the SILTRA platform, with payment due by the last day of the following month. IRPF income tax withholdings must be remitted monthly or quarterly via Form 111, with the annual summary (Form 190) due by 31 January each year.

The mandatory 14-payment salary structure adds approximately 16.7% to annual salary costs above a 12-month calculation, and employers who budget on 12 months without accounting for the two extra payments are systematically underpaying and creating a compliance liability.

Termination risk and severance liability

Spain recognizes three types of dismissal: disciplinary (no severance if upheld), objective (20 days' salary per year of service, capped at 12 months), and unfair (33 days' salary per year of service, capped at 24 months).

Procedural failures such as missing the mandatory prior hearing in disciplinary cases, issuing a defective dismissal letter, or applying the wrong grounds automatically convert any dismissal into an unfair one, regardless of the substantive merits.

Severance liability accrues as a contingent obligation from the first month of employment, and companies that do not account for it in workforce planning regularly underestimate total employment cost.

For companies managing a team in Spain through a local entity, a structural headcount reduction also triggers collective dismissal procedure requirements if the thresholds in Articles 51–52 of the Workers' Statute are met, including a mandatory 30-day consultation period with employee representatives.

Each of the six areas above, CBA misapplication, misclassification, fixed-term overuse, time recording gaps, payroll filing errors, and procedural dismissal failures, carries a direct financial or legal consequence in Spain.

For foreign companies managing Spanish hires without in-house legal or payroll infrastructure, exposure across all six simultaneously is the default.

Skuad Shield helps address compliance complexity across supported markets from a single platform, without requiring in-house Spanish legal counsel.

Here is what Skuad Shield helps with:

• Contractor classification guidance across supported markets, helping surface misclassification risk before it becomes a labour inspection finding
• Legal-reviewed employment contract generation across 160+ countries, aligned with local labor law and statutory disclosure requirements
• Country-specific statutory requirements are flagged for each new hire, so payroll, benefit, and contribution obligations are visible before onboarding begins
• Termination documentation support aligned with local labor law requirements across supported markets, including surfacing notice obligations, just-cause documentation requirements, and severance calculation methodology before the process starts
• Payroll and tax compliance support covering wage requirements, local tax withholdings, and deductions across supported markets
• Audit-ready record-keeping for regulatory inspection cycles across supported markets

For companies managing Spanish hires as part of a broader global team, centralizing compliance across one platform removes the need to coordinate separately across local legal, payroll, and HR functions per country.

See how Skuad Shield supports employment compliance across Spain and 160+ countries.

What is the cost of hiring in Spain?

When you decide to hire employees in Spain, carefully evaluating the various costs involved is crucial. Let’s examine the same.

In addition, quite a few other types of costs are included when hiring in Spain. They can primarily be categorized into the following types.

Spain's total employer cost runs well above gross salary once social security contributions (~30.65% of the contribution base), 14 salary payments, and applicable CBA obligations are factored in.

For most roles, the all-in employment cost lands between 38% and 50% above gross, depending on contract type, seniority, and sector.

Skuad's Employee Cost calculator helps estimate the total cost of hiring in Spain and across 160+ countries, covering gross salary, employer social security contributions, and statutory obligations in a single view.

Calculate the true cost of hiring in Spain with Skuad’s Employee Cost Calculator.

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

PureRED, a marketing and advertising agency serving major retail and consumer brands, needed to onboard staff compliantly across six countries, including Spain, each with distinct labor codes and payroll structures.

Managing localized contracts, multi-currency payroll, and statutory compliance across jurisdictions simultaneously was creating significant operational overhead. Skuad's EOR platform supported compliant onboarding, contract generation, and multi-currency payroll across all six markets, with 65 employees brought on board.

"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

Hire in Spain without an entity setup

By now, you have an understanding of how to hire a remote team in Spain: TGSS registration, mandatory CNAE‑2025 classification, the 14‑payment salary structure, employer social security contribution, IRPF withholding, and key leave and termination rules under the Workers’ Statute. Spain’s 5,000+ collective bargaining agreements, strict fixed‑term limits, and mandatory working‑time records create compliance challenges for foreign employers without local setup or in‑country expertise.

Payroll in Spain requires precise steps: register with the TGSS before the first day, identify the correct convenio colectivo, calculate employer and employee social contributions, withhold IRPF, run monthly SILTRA filings, produce payslips, and submit the year‑end Form 190. Managing these processes manually increases administrative overhead and the risk of compliance errors.

Skuad acts as the legal employer in Spain and supports payroll, contributions, contracts, and work authorization for foreign hires, so you can hire, onboard, and pay your team without a local entity. It also supports contract generation, payroll in 70+ currencies, statutory contributions, and ongoing compliance as the rules change.

Book a demo to see how Skuad gets your first Spain hire onboarded within weeks.

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 on your behalf under the Estatuto de los Trabajadores (Workers' Statute), handling TGSS social security registration, IRPF tax withholding, employment contracts, and payroll, while you retain day-to-day management of the employee's work.

2. How much does an EOR in Spain cost?

EOR service fees in Spain typically run between $300 and $800 per employee per month, on top of mandatory employer social security contributions of approximately 30% of gross salary. Total employment cost generally ranges from 38% to 50% above gross salary, depending on the applicable sector collective agreement.

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

Foreign companies can typically hire in Spain without a local entity by working through an EOR. The EOR registers with the Tesorería General de la Seguridad Social (TGSS), holds the legal employment relationship, and handles all filings under the Estatuto de los Trabajadores on the hiring company's behalf.

4. What are the risks of misclassifying a worker as a contractor in Spain?

Misclassifying an employee as an independent contractor in Spain carries significant risk. Spanish labor courts scrutinize the actual nature of the working relationship, not just the contract. If misclassification is found, companies may owe back social security contributions, statutory benefits, and severance under the Estatuto de los Trabajadores.

5. How does an EOR in Spain compare to setting up a legal entity?

Setting up a Spanish entity typically takes 4 to 8 weeks and requires notary fees, TGSS enrollment, and ongoing local compliance costs. An EOR removes those setup requirements and lets companies hire within days. Entity setup generally becomes more cost-effective at around 10-15 employees.

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

Onboarding an employee through an EOR in Spain typically takes 2 to 5 business days, compared to 4 to 8 weeks to establish a Sociedad Limitada. The timeline depends on candidate document readiness, applicable collective bargaining agreements, TGSS registration confirmation, and whether a work permit is required.