Professional Employer Organization (PEO) in Spain

What is a PEO?

PEO stands for professional employer organization. These third-party partners act as a trusted resource for all things international hiring and people management. Using a PEO in Spain can help you:

Hire quickly

You can onboard and scale your workforce much more quickly in just days.

Save money

There's no need to set up a local entity for recruiting in Spain, so you could save thousands of dollars using Skuad's services.

Mitigate risk

Help minimize your risk by ensuring that your company complies with local employment laws in Spain and protects your business from potential legal fees and fines.

Unlock added convenience

Skuad offers a streamlined process for managing your HR responsibilities, including employee benefits and payroll but doing so in a flexible and convenient way so you can make changes whenever necessary.

Using Skuad empowers you to take on business expansion in Spain with confidence. Talk to the team today.

Expanding your business in Spain: the details you need to know

When looking to expand overseas and hire local talent, it’s important to understand the unique employment laws in Spain — and the industries that have their own regulations, too.

To meet the legal requirements before expanding and hiring talent in Spain, you must:

• Provide a new employee with a formal contract of employment in Spanish
• Show the currency for compensation quoted in Euros
• Respect that temporary hires of more than four weeks will need a written employment contract by law.

It’s worth noting that employees in Spain prefer a non-fixed-term employment contract since these have more legal protections than a fixed-term contract will offer.

Also, if you are looking to hire talent as a remote worker in Spain, you will need a remote working employment agreement to be put in place.

The contract will detail how your employee will be paid, how their expenses will be met, and it will also deal with working conditions, including health and safety requirements. This last part became law in 2020 and must be followed.

Confused? Chat with one of Skuad’s experts to know more about employment laws in Spain.

Employing staff in Spain: laws, leave, permits, and pay 

Labor laws in Spain offer significant protection for all employees and the rules are comprehensive.

These rules have an impact on the cost of doing business in Spain and all employers will need to follow the Estatuto de los Trabajadores, or the Workers’ Statute.

The country's labor market was reformed in 2012 and employment laws since then have focused on data protection, gender equality, and workplace safety plus social security benefits.

Work permits

For international business in Spain, understanding work permit rules will be crucial. For citizens of the European Union (EU), Switzerland, or the European economic area (EEA), there's no need for a work permit or visa.

All non-EU citizens will require a work permit and, usually, they must secure a job before they can apply for a work permit and permission to live in the country.

There's also no need for a work visa for UK citizens who were legally resident in the country before 1 January 2021. After this date, UK citizens will require a work visa.

Salary and wages in Spain

In Spain, a company will typically pay their workers 14 times per year — the extra payments are made in July and December.

Working hours in Spain

Full-time working hours in Spain are a maximum of 40 hours per week and this is calculated on an annual basis.

Also, at least 12 hours must elapse when the working day ends, and the next one begins. All employees who work for at least six hours during a working day are entitled to a 15-minute break.

All employers must guarantee a minimum weekly rest time of one-and-a-half days, and these must be uninterrupted.

If the employment contract is for more than nine hours per day, then the employee must agree to those extra hours.

Unpaid leave

Costs for setting up a business in Spain will also take into account the generous allowance of annual holiday leave with up to 22 working days for a full-time worker.

Under the law, at least one vacation taken by an employee must be for two weeks.

There are also nine national public holidays — and up to three times more at a regional level.

Paternity and maternity pay in Spain

Paternity and maternity leave is now 16 weeks for both parents in Spain, and this extends to foster and adoptive parents.

The parents must take six weeks of leave immediately after their child is born. The remaining 10 weeks can be taken when desired within one year following adoption or birth of a child.

Sick pay

If your Spanish employee becomes injured or sick and they must temporarily stop working, then there's an allowance for incapacity.

This will cover the loss of their income every day, and that's in addition to receiving healthcare.

However, between day 14 and 20 of injury or sick leave, the employee receives 60% of their salary. From the 21st day, they receive 75% of their salary.

Other paid leave in Spain

Spanish labor laws also allow workers to take paid time off for:

• Getting married - 15 calendar days
• Serious illness, accident or death of a family member - two calendar days (four days if travel is needed)
• Moving home - one day

The rules also cover:

• Breastfeeding a child under the age of nine months with a mother or father taking a one-hour paid break from work every day
• Reducing the working day between one-half or one-eighth when taking legal guardianship of a child aged under 12 or a disabled person.

Company registration in Spain for foreigners

The only requirement for a foreigner to register a company in Spain is that they are a legal resident. The company name will need to be registered with the Registro Mercantil Central, or Mercantile Registry, and you need a company tax identification number and open a business account.

Once done, you need to sign the deed of incorporation and abide by the country’s employment laws.

This is a process you can sidestep when working with a PEO like Skuad. Book a demo to see our service in action.

Spain’s corporate tax rate

In Spain, the corporate tax rate is 25%. Though, depending on circumstances, other taxes may also be applied.

Employers will need to pay into a social security fund, and this can account for up to 30% of an employee’s salary, with an upper limit of €3,500.

An employee will need to pay 6.35% of their pay into the Social Security fund.

Spain’s income tax

Workers in Spain are taxed progressively with income tax levied at between 19% and 45%.

The country's minimum wage is €1,108.30 per month, and some industries and jobs have a higher minimum wage.

How much does it cost to build a team in Spain?

Businesses that want to take on employees or contractors in Spain have two main options: opening a legal entity of their own (i.e. incorporating a company in Spain) or working with a PEO. 

Cost of company incorporation Spain

If you take this route, then chances are you’ll need to register a subsidiary office or HQ on Spanish shores. This requires a minimum share capital of €3000 ($3333), which is fine for most businesses. 

If your business is a joint-stock company, however, (that is, you have multiple investors holding shares) then that required sum jumps up to €60,000 ($66,000) — and that’s got to be deposited into a local bank account at the time of incorporation.

Gulp. That’s quite a lot of money — and a lot of your time to manage, too.

Cost of PEO in Spain

As a manager in a fast-growing business, we’re willing to bet you’re time-poor. And you might be working on a tight budget, too. In that case, working with a PEO in Spain is the savvier move indeed.

A PEO in Spain will already have undergone the hard work and cost of establishing a local entity in the country. That means, in turn, that you can operate quickly and efficiently in-country without having to worry about adapting to local employment laws and regulations.

It helps too that Skuad offers a range of services with no long-term commitment or hidden costs. It costs just $199 per month to hire full-time employed talent with the Skuad team managing legal compliance, tax, benefits, and payroll.

Alternatively, you may need a tailor-made solution for meeting a global enterprise need and the team is happy to talk about custom pricing.

Get started with a PEO in Spain today

Skaud’s experts understand the steps required to hire talent, deliver legal compliance, draft relevant employment contracts and then take good care of your Spanish employees once they are on board. 

The best way to understand how effective Skaud can be as a partner when you hire international employees is to book a demo of the service. What are you waiting for, exactly? Let’s get started today!