Spain Payroll Information – Deel Global Payroll

Updated on: 2025/08/04 14:35 (UTC)

Overview

Spain is a constitutional monarchy located in western Europe and is a member of the European Union. The country is divided into 17 autonomous communities, also known as autonomous regions, which are further divided into 50 provinces. The official languages of Spain are Spanish, Catalan, Galician, and Basque, and some of Spain’s autonomous communities have official languages in addition to these. The primary part of Spain is on the mainland of continental Europe, and it is bordered by Portugal to the west, Andorra and France to the north, the Mediterranean Sea to the east, the Strait of Gibraltar to the south, the Gulf of Cádiz to the southwest, the Bay of Biscay to the north, and the broader Atlantic Ocean to the northwest. Mainland Spain also has a minor border in the southern part of the country with the British Overseas Territory of Gibraltar. While mainland Spain is in Europe and Morocco is in Africa, they are quite close to each other, with the Strait of Gibraltar separating them at its narrowest point by about 15 kilometers. In Spanish, the country of Spain is known as España.

Outside of mainland Spain, the country of Spain includes the Balearic Islands (Illes Balears), which is an archipelago in the Mediterranean Sea east of the mainland; the Canary Islands (Las Islas Canarias), which is an archipelago in the broader Atlantic Ocean that at its closest point to mainland Spain is about 1,000 kilometers afar; and a group of territories south of the mainland that either border Morocco or are within 5 kilometers of its coast, including the autonomous cities of Ceuta and Melilla, plus additional places of sovereignty (plazas de soberanía), including the Alhucemas Islands (Islas Alhucemas), the Chafarinas Islands (Islas Chafarinas), and Peñón de Vélez de la Gomera. The Balearic Islands and the Canary Islands are two of Spain’s 17 autonomous communities, and the 15 autonomous communities in mainland Spain are Andalusia (Andalucía), Aragon (Aragón), Principality of Asturias (Principado de Asturias, Principáu d’Asturies), Basque Country (País Vasco, Euskadi), Cantabria, Castile and León (Castilla y León), Castilla-La Mancha (Castile–La Mancha), Catalonia (Cataluña, Catalunya), Extremadura (Estremaúra), Galicia (Galiza), La Rioja (Errioxa), Community of Madrid (Comunidad de Madrid), Region of Murcia (Región de Murcia), Chartered Community of Navarre (Comunidad Foral de Navarra, Nafarroako Foru Komunitatea), and Valencian Community (Comunidad Valenciana).

Spain’s currency is the euro.

Employers are required to withhold income taxes from workers in Spain and withhold and separately pay Social Security taxes on all workers. Some jurisdictions also assess payroll-related taxes. Spain has several labor laws outlined in the Labor Guide.

Foreign workers are subject to different income tax regulation and visa requirements.

Spanish residents working in the United States are covered by U.S. tax law with possible treaty and work status exclusions applying. Work within the U.S. states and territories is covered by various labor laws.

CURRENCY DETAILS

The currency of Spain is the euro (€), which Spain uses because it is part of the euro area, also known as the eurozone, which is a group of countries that adopted the euro as their currency. The internationally recognized three-letter currency code for the euro is EUR, which also is one of the currency’s two commonly used currency symbols. The English plural form of euro officially recognized by the European Commission is the same as its singular form, although in common English parlance the plural form is euros. In Spanish, the plural form of euro is euros.

When an amount of euro is written using the currency symbol € in accordance with the European Commission’s standard placement treatment of the symbol, which is the placement treatment used for the English language, the symbol precedes the numerical value with no space between the numerical value and symbol. When an amount of euro is written in Spanish using the currency symbol €, the symbol follows the numerical value with a space between the numerical value and symbol.

When an amount of euro is written using the currency symbol EUR, the symbol precedes or follows the numerical value with a space or no space between the numerical value and symbol.

One hundredth ( ¹ ⁄ ₁₀₀ ) of a euro is referred to in English as a cent and the English plural form of cent officially recognized by the European Commission is the same as its singular form, although in common English parlance the plural form is cents. In Spanish, as officially recognized by the European Commission, one hundredth of a euro also is referred to as a cent and its plural form is cents, although in common Spanish parlance, one hundredth of a euro is referred to as a céntimo, with the plural form of céntimos.

When amounts of euro are written in Spanish, the comma that in English separates the thousands place from the hundreds place instead is rendered as a dot (.), and the dot that in English separates the ones place from the tenths place instead is rendered as a comma.

TAXES

The central government generally enacts laws relating to income tax, but the 17 autonomous communities also have some power to levy taxes.

Spain employers also are responsible both for making contributions based on employee payroll to the country’s Social Security program and for withholding a portion from each employee’s pay to fund the program.

While 15 of the autonomous communities and the autonomous cities of Ceuta and Melilla pay income taxes to the National Tax Authority, the Basque Country and the Navarre community maintain their own tax authorities. However, both the Basque Country and the Navarre community coordinate their tax systems with the National Tax Authority and therefore have nearly identical income tax structures. The other autonomous communities have varying progressive income tax rates that are added to rates provided by the National general tax scale.

The tax authority also has specialized rules applicable to residents of the Canary Islands, Ceuta, and Melilla.

In Spain, the word retention (retencion) often is used instead of the word withholding with regard to the process of deducting taxes from wages as part of payroll.

For employment-related taxes, the tax year in Spain is the calendar year (Jan. 1 to Dec. 31).

Coronavirus (Covid-19) Guidance: Employers in certain sectors (Spanish) may request postponements of social tax deposits due for wages paid in May or June 2020 by six months. Requests for a month must be made within the first 10 days of each month. Employers that requested exemption from social tax contributions may also postpone the same deposits, but a 0.5% interest rate is applied to the postponed deposits.

Employers in Navarre may postpone income tax withholding deposits due from Jan. 1 to April 30, 2021. To qualify, gross revenues may not exceed €6,010,121.24 in 2020.

Social tax reductions: Employers may request exemption from employer social taxes, or may receive varying reductions in employer social taxes owed, if they requested a temporary employment regulation file (expedientes de regulación temporal de empleo, abbreviated as ERTE), for reasons related to the new coronavirus pandemic. A new coronavirus-related ERTE allows employers to suspend employment contracts or reduce working hours to ensure the survival of the business, allows a partial resumption of business once the necessary conditions exist, and may be in effect until Feb. 28, 2022. There are greater reductions for employees who are working compared to employees whose employment contracts are suspended. All exemptions and reductions vary depending on the size of the employer. Exemptions may be requested for the duration of the business suspension or reduction in working hours.

According to European Commission guidance, employees who normally work in one European Union member country and live in another are still considered to be insured by the social insurance system of the normal work country while working at home.

Income Taxes

Personal income tax (Impuesto sobre la Renta de las Personas Fisicas, abbreviated as IRPF) is levied on the net taxable worldwide income, from all sources of resident individuals or families. The tax is collected and regulated by the Tax Agency (Agencia Tributaria), a part of the Ministry of Finance. Nonresident individuals are subject to Income Tax of Nonresident Individuals (Impuesto sobre la Renta de los no Residentes, IRNR), a flat tax discussed in the Foreign Workers section.

Coverage: All employers of Spanish residents must withhold personal income tax on the worldwide income of their employees. Employees are determined to be residents if they have either spent more than 183 days in a calendar year within Spanish territory or if their main center of economic activities or interests is located are Spain.

National personal income tax provisions are not in effect for residents of the autonomous communities of Basque Country and the Chartered Community of Navarre, and residents of these autonomous communities instead are assessed income taxes based on rates established by these autonomous communities.

Employees: Spain’s income tax law defines employees as all individuals who earn income from work or employment of any kind. All employers must withhold IRPF from resident employees.

Rates and Thresholds: Generally, Spain’s income tax is assessed on a progressive scale, with the range of rates applicable to an individual’s income depending on the autonomous community or autonomous city where the taxpayer is resident. Spain’s income tax brackets applicable for income tax withholding on employment income are different from Spain’s tax brackets for income in general. The brackets in effect for income tax withholding on employment income apply to all employees who are residents of Spain, with the exceptions of residents of the autonomous communities of Basque Country and the Chartered Community of Navarre.

For income taxation in general, the taxation of a resident of Spain is generally determined using two brackets: a national set of income tax brackets, with rates ranging from 19 to 45%, for income in general that applies to all residents of Spain regardless of their specific location of residence in the country, and the one set of income tax brackets among numerous sets of jurisdictional income tax brackets that corresponds to their autonomous community or autonomous city of residence. There are 17 jurisdictional income tax brackets specified by Spain’s Tax Agency, including 15 for all the autonomous communities except Basque Country and Navarre, one for the autonomous cities of Ceuta and Melilla, and one for residents of Spain who are abroad. The total general taxation of residents of Spain other than residents of Basque Country and Navarre is calculated by determining the sum of their tax liability under the national set of income tax brackets for income in general and their tax liability under the jurisdictional income tax bracket that applies to them based on their location of residence. Income tax rates applicable to residents of Basque Country and Navarre are indicated in the State/Jurisdiction Taxes section of this primer.

The Personal Income Tax Law specifies nationwide income tax withholding rates for residents pertaining to employment income. Effective starting Jan. 1, 2021, the rates and applicable ranges of income for residents of Spain, except residents of Basque Country and Navarre, are as follows:

Range of Income for Tax Year (Euro)	Income Tax Rate
Up to €12,450	19%
More than €12,450 and up to €20,200	24%
More than €20,200 and up to €35,200	30%
More than €35,200 and up to €60,000	37%
More than €60,000 and up to €300,000	45%
More than €300,000	47%

Effective until Dec. 31, 2020, the income tax withholding rates and applicable ranges of income for residents of Spain, except residents of Basque Country and Navarre, were as follows:

Range of Income for Tax Year (Euro)	Income Tax Rate
Up to €12,450	19%
More than €12,450 and up to €20,200	24%
More than €20,200 and up to €35,200	30%
More than €35,200 and up to €60,000	37%
More than €60,000	45%

Spain’s Tax Agency provides a general webpage with resources for calculating tax withholding on employment income, including a calculator for tax withholding.

Effective starting Jan. 1, 2021, for income in general, the national set of income tax brackets for residents of Spain, except residents of Basque Country and Navarre, is as follows:

Range of Income for Tax Year (Euro)	Income Tax Rate
Up to €12,450	9.5%
More than €12,450 and up to €20,200	12%
More than €20,200 and up to €35,200	15%
More than €35,200 and up to €60,000	18.5%
More than €60,000 and up to €300,000	22.5%
More than €300,000	24.5%

Effective until Dec. 31, 2020, for income in general, the national set of income tax brackets for residents of Spain, except residents of Basque Country and Navarre, was as follows:

Range of Income for Tax Year (Euro)	Income Tax Rate
Up to €12,450	9.5%
More than €12,450 and up to €20,200	12%
More than €20,200 and up to €35,200	15%
More than €35,200 and up to €60,000	18.5%
More than €60,000	22.5%

For income in general, the jurisdictional income tax brackets for residents of Spain’s autonomous communities other than Basque Country and Navarre, residents of Spain’s autonomous cities of Ceuta and Melilla, and residents of Spain who are abroad are as follows:

Jurisdiction	Tax Rates and Corresponding Annual Income (Euro)
Andalucía	Up to €12,450:9.5%More than €12,450 and up to €20,200: 12%More than €20,200 and up to €28,000: 15%More than €28,000 and up to €35,200: 15.9%More than €35,200 and up to €50,000: 18.8%More than €50,000 and up to €60,000: 19.10%More than €60,000 and up to €120,000: 23.10%More than €120,000:24.30%
Aragón	Up to €12,450:10%More than €12,450 and up to €20,200: 12.5%More than €20,200 and up to €34,000: 15.5%More than €34,000 and up to €50,000: 19%More than €50,000 and up to €60,000: 21%More than €60,000 and up to €70,000: 22%More than €70,000 and up to €90,000: 22.5%More than €90,000 and up to €130,000: 23.5%More than €130,000 and up to €150,000: 24.5%More than €150,000:25%
Principality of Asturias	Up to €12,450:10%More than €12,450 and up to €17,707.19: 12%At least €17,707.20 and up to €33,007.19: 14%At least €33,007.20 and up to €53,407.19: 18.5%At least €53,407.20 and up to €70,000: 21.5%More than €70,000 and up to €90,000: 22.5%More than €90,000 and up to €175,000: 25%More than €175,000:25.5%
Balearic Islands	Up to €10,000:9.5%More than €10,000 and up to €18,000: 11.75%More than €18,000 and up to €30,000: 14.75%More than €30,000 and up to €48,000: 17.75%More than €48,000 and up to €70,000: 19.25%More than €70,000 and up to €90,000: 22%More than €90,000 and up to €120,000: 23%More than €120,000 and up to €175,000: 24%More than €175,000:25%
Canary Islands	Up to €12,450:9%More than €12,450 and up to €17,707.20: 11.5%At least €17,707.21 and up to €33,007.20: 14%At least €30,007.21 and up to €53,407.20: 18.5%At least €53,407.21 and up to €90,000: 23.5%More than €90,000 and up to €120,000: 25%More than €120,000:26%
Cantabria	Up to €12,450:9.5%More than €12,450 and up to €20,200: 12%More than €20,200 and up to €34,000: 15%More than €34,000 and up to €46,000: 18.5%More than €46,000 and up to €60,000: 19.5%More than €60,000 and up to €90,000: 24.5%More than €90,000:25.5%
Castile-La Mancha	Up to €12,450:9.5%More than €12,450 and up to €20,200: 12%More than €20,200 and up to €35,200: 15%More than €35,200 and up to €60,000: 18.5%More than €60,000:22.5%
Castile and León	Up to €12,450:9.5%More than €12,450 and up to €20,200: 12%More than €20,200 and up to €35,200: 14%More than €35,200 and up to €53,407.19: 18.5%At least €53,407.20:21.5%
Catalonia	Up to €17,707.19:12%At least €17,707.20 and up to €33,007.19: 14%At least €33,007.20 and up to €53,407.19: 18.5%At least €53,407.20 and up to €89,999: 21.5%At least €90,000 and up to €120,000: 23.5%More than €120,000 and up to €174,999: 24.5%At least €175,000.20:25.5%
Extremadura	Up to €12,450:9.5%More than €12,450 and up to €20,200: 12.5%More than €20,200 and up to €24,200: 15.5%More than €24,200 and up to €35,200: 16.5%More than €35,200 and up to €60,000: 20.5%More than €60,000 and up to €80,200: 23.5%More than €80,200 and up to €99,200: 24%More than €99,200 and up to €120,200: 24.5%More than €120,200:25%
Galicia	Up to €12,450:9.5%More than €12,450 and up to €20,200: 11.75%More than €20,200 and up to €27,700: 15.5%More than €27,700 and up to €35,200: 17%More than €35,200 and up to €47,600: 18.5%More than €47,600 and up to €60,000: 20.5%More than €60,000:22.5%
Community of Madrid	Up to €12,450:9%More than €12,450 and up to €17,707.19: 11.2%At least €17,707.20 and up to €33,007.19: 13.3%At least €33,007.20 and up to €53,407.19: 17.9%At least €53,407.20:21%
Region of Murcia	Up to €12,450:9.80%More than €12,450 and up to €20,200: 11.98%More than €20,200 and up to €34,000: 14.62%More than €34,000 and up to €60,000: 18.86%More than €60,000:23.10%
La Rioja	Up to €12,450:9%More than €12,450 and up to €20,200: 11.60%More than €20,200 and up to €35,200: 14.60%More than €35,200 and up to €50,000: 18.80%More than €50,000 and up to €60,000: 19.5%More than €60,000 and up to €120,000: 25%More than €120,000:27%
Valencian Community	Up to €12,450:10%More than €12,450 and up to €17,000: 11%More than €17,000 and up to €30,000: 13.9%More than €30,000 and up to €50,000: 18%More than €50,000 and up to €65,000: 23.5%More than €65,000 and up to €80,000: 24.5%More than €80,000 and up to €120,000: 25%More than €120,000:25.5%
Autonomous Cities of Ceuta and Melilla	Up to €12,450:9.5%More than €12,450 and up to €20,200: 12%More than €20,200 and up to €35,200: 15%More than €35,200 and up to €60,000: 18.5%More than €60,000:22.5%
Residents of Spain Who Are Abroad	Up to €12,450:9.5%More than €12,450 and up to €20,200: 12%More than €20,200 and up to €35,200: 15%More than €35,200 and up to €60,000: 18.5%More than €60,000:22.5%

Separate income tax rates are in effect for nonresidents working in Spain, with rates indicated in the Foreign Workers section of this primer.

Registration: All employers must submit Form 36: Declaration of Registration, Modification, and Removal in the Census of Employers (Declaración censal de alta, modificación y baja en el censo de Empresarios, Profesionales y Retenedores) and obtain a Tax Identification Number (Número de Identificación Fiscal, NIF) from the provincial delegation of the Tax Agency, before initiating commercial activities. This can be done through the Tax Agency’s website.

Taxable Amounts: Generally, taxable income subject to income tax withholding is specified as all remuneration paid for labor performed minus allowable deductions. Some deductions include Social Security contributions, pension accounts contributions, union dues, legal dues for labor disputes, disability deductions, old age deductions, irregular income deductions, among others. While deductions are determined at the national level, the autonomous communities determine the size of the deductions.

Withholding Methods: Generally, employers should withhold income taxes at the applicable rate from every paycheck. However, employers should withhold 35% of company administrators, members of the board of directors, or their representatives. However, when the income comes from entities with a net turnover less than €100,000, the percentage of withholding will be 19%.

Income exempt from withholding varies depending on the number of deduction claimed by employees, but has an absolute minimum of €11,162.

Returns and Remittance: Payment and reporting obligations vary according to withheld amounts. Private employers that are considered to be large companies must make monthly income tax payments while all other private employers may choose to pay and report on a quarterly basis.

A large company is one that had gross revenue of at least €6,010,121.04 in the previous year.

Monthly payments are due by the 20th of every month for withheld amounts from the previous month, while quarterly payments are due the 20th of January, April, July and October. Along with monthly payments, employers must complete Form 111: IRPF Withholdings at Source and submit it to the Ministry of the Treasury.

Additionally, all employers must file annual returns by Jan. 20 for nonelectronic filings and Jan. 31 for electronic filings. To file, employers should submit an Annual Summary of Income and Withholdings, or Form 190, to the Ministry of the Treasury. Employers must also provide all employees with a certificate detailing all withholdings performed in the previous year by Jan. 20.

Employee Share Plans: There are numerous types of employee stock share plans that employers can offer to both employees and nonemployees such as directors and consultants, according to the Spanish Constitution and Spanish Workers’ Statute. These plans include: Basic Model Share Option Plan, Purchase Option Plan, Performance-Vested Option Plan (PVOP), Premium Option Plan, Phantom Share Option Plan, Re-priceable Option Plan, and Indexed Share Option Plan.

If an employer delivers shares directly to an employee, they are nontaxable up to €12,000 a year. After that, the income derived from directly delivered shares is subject to income taxation and social security implications. For an employer that qualifies employees for enrolling in stock share plans but does not directly deliver the shares, all income accrued is subject to taxation and social security implications.

When shares from a plan are sold, the income is taxed as a capital gain. This rate is currently 19% for income up to €6,000, 21% for income between €6,000 and €50,000, 23% for income over €50,000, and 19% for non-residents.

Recordkeeping: Payroll documents generally should be kept for ten years from the date at which the tax was payable.

Penalties: Failure to file when no taxes are due will result in a fine of €100. Underpayment penalties range from 50 to 150% of the unpaid tax liability. Surcharges ranging from 5% to 20% are imposed for late payment where payment is made voluntarily by the taxpayer without investigation by the tax authorities. Interest is also imposed where the payment is more than one year overdue.

Social Taxes

Social Security in Spain is administered and regulated by the National Social Security Institute (Instituto Nacional de la Seguridad Social, abbreviated as INSS). Employers are required to contribute to Social Security on behalf of their employee in addition to employees contributing to the system monthly. Social contributions (cotizaciones sociales) cover pension plans, labor accidents, and illnesses.

The Spanish social security system provides for a general social security scheme that includes most activities and is applicable to majority of the workforce in Spain.

Coverage: All employers are subject to Social Security contributions and withholding requirements on all remuneration paid to employees. Coverage begins at the start of employment.

Rates and Thresholds: Social security contributions mainly consist of four types of obligatory assessments: the primary social security (seguridad social) contributions, contributions for the unemployment (desempleo) program, contributions for the Salary Guarantee Fund (Fondo de Garantía Salarial, abbreviated as FOGASA), and contributions for vocational training (formación profesional). These assessments help fund pensions, unemployment insurance, illnesses and maternity leave, and other aspects.

Most employee-employer relationships are assessed contribution rates under the General Social Security Program (Régimen General de Seguridad Social), also known as rates for Group 1 (Grupo 1), although aspects of rate determinations for some employee-employer relationships are not part of the determinations for Group 1 and instead are determined under the Special Social Security Programs (Regímenes especiales de Seguridad Social), also known as rate determinations for Groups 2 and 3 (Grupos 2 y 3). There are 11 progressional categories, also known as contribution groups, within Group 1 that vary regarding the minimum tax base (base mínima de cotización) and maximum tax base (base máxima de cotización) applicable to assessments of the four aforementioned types of obligatory assessments.

The minimum tax base is the minimum amount of income actually or hypothetically paid to an employee per specified period upon which the four social security assessments may be assessed on the employee and employer, and if the employee’s actual income for the specified period is lower than the minimum tax base, social security contributions assessed on the employee must be assessed as if the employee were paid the minimum tax base. The maximum tax base is the maximum amount of income paid to an employee per specified period upon which the four social security assessments may be assessed on the employee and employer.

The maximum tax base in effect for the first through seventh professional categories of Group 1 is a monthly amount that is 30 times the daily amount that is the maximum tax base in effect for the eighth through 11th professional categories of Group 1. The minimum tax bases generally in effect for the first through third professional categories of Group 1 are monthly rates that are not designed to be a multiple of one-sixth ( ¹ ⁄ ₆ ) of the minimum wage; the minimum tax base in effect for the fourth through seventh professional categories of Group 1 is a monthly rate that is seven-sixths ( ⁷ ⁄ ₆ ) of the official monthly minimum wage designed to accommodate 14 payments for a year, rounded to the nearest multiple of €0.10; and the minimum tax base in effect for the eighth through 11th professional categories of Group 1 is a daily rate that is seven-sixths ( ⁷ ⁄ ₆ ) of the daily minimum wage. When Spain increases its minimum wage, the minimum tax bases in general and the minimum tax bases for part-time work are increased by the percentage by which the minimum wage increased, with the monthly minimum bases among them rounded to the nearest multiple of €0.10.

Effective for 2021, unchanged from 2020, the minimum and maximum tax bases for each of the 11 professional categories in Group 1 are as follows:

Category Number	Workers in Category	Minimum Tax Base in General (Euro)	Maximum Tax Base (Euro)
1	Engineers, College Graduates, and Senior Management Staff in General	€1,466.40/month	€4,070.10/month
2	Technical Engineers, Experts, and Certified Assistants	€1,215.90/month	€4,070.10/month
3	Administrative and Workshop Managers	€1,057.80/month	€4,070.10/month
4	Non-Graduate Support Staff	€1,050/month	€4,070.10/month
5	Administrative Officers	€1,050/month	€4,070.10/month
6	Subordinates	€1,050/month	€4,070.10/month
7	Administrative Assistants	€1,050/month	€4,070.10/month
8	First- and Second-Degree Skilled Workers	€35/day	€135.67/day
9	Third-Degree Skilled Workers and Specialists	€35/day	€135.67/day
10	Unskilled Laborers	€35/day	€135.67/day
11	Workers in Any Profession Who Are Younger Than 18 Years of Age	€35/day	€135.67/day

The following rates for primary social security contributions, unemployment program contributions, Salary Guarantee Fund contributions, and vocational training contributions that are specifically identified in this primer are for employee-employer relationships pertaining to Group 1.

Primary social security contributions: The standard primary social security contribution rates are known as common contingency (contingencia común) contributions, and other rates may be in effect for an employee-employer relationship based on employment circumstances. The common contingency rates generally apply to payments for regular hours worked, but not for overtime payments.

Effective for 2021, unchanged from 2020, the general common contingency rate for employers is 23.6% and the rate for employees is 4.7%.

Some employee-employer relationships may be eligible for length-of-experience common contingency rates, which are significantly lower than the general common contingency rates, if the employees have fulfilled thresholds based on age and amount of time paying social security contributions.

The length-of-experience common contingency rates are available to employee-employer relationships involving employees who are at least 65 years of age but no older than 65 years and five months of age who have paid social security contributions for at least 36 years and six months, and employees who are at least 65 years and six months of age who have paid social security contributions for at least 35 years and six months.

The length-of-experience common contingency rate for employers is 1.25% and the rate for employees is 0.25%.

An employer’s common contingency rate is 36% higher than it normally would be for employee-employer situations involving temporary contracts with a duration of fewer than seven days, although this increase does not apply to interim contracts.

Primary social security contribution rates for overtime payments are differentiated based on whether the overtime occurred because of a force majeure, i.e. an unforeseeable scenario that caused a contract to be insufficiently fulfilled.

The primary social security contribution rate for overtime in general is 23.6% and the rate for employees is 4.7%, and the primary social security contribution rate for overtime because of a force majeure is 12% for employers and 2% for employees.

Unemployment: There is a general unemployment program contribution rate for employers and a general rate for employees, although different rates are applicable to employee-employer relationships that involve a full-time or part-time contract of fixed duration.

The general unemployment contribution rate for employers is 5.5% and the rate for employees is 1.55%.

With regard to employee-employer relationships that involve a full-time or part-time contract of fixed duration, the unemployment contribution rate for employers is 6.7% and the rate for employees is 1.6%.

Salary Guarantee Fund: Employers, but not employees, are liable for contributions to the Salary Guarantee Fund (Fondo de Garantía Salarial, abbreviated as FOGASA).

Employers are assessed a contribution rate of 0.2% for the Salary Guarantee Fund.

Vocational Training: The vocational training contribution rate for employers is 0.6% and the rate for employees is 0.1%.

Among the types of occupations with aspects of social security contribution assessment that are not part of the Group 1 rates and instead are part of the Group 2 or Group 3 rates are agricultural workers, household workers, and maritime workers.

Workplace Accidents and Occupational Diseases: Additionally, employers, but not employees, are assessed contributions to fund replacement compensation for workers who in the course of employment become injured or ill. The contributions for replacement compensation programs for workplace accidents and occupational diseases (accidentes de trabajo y enfermedades profesionales) consist of two types of contributions that are jointly assessed on employers: those for temporary disability (incapacidad temporal, abbreviated as IT) and those for permanent disability, death, and survivors (incapacidad permanente, muerte, y supervivencia, abbreviated as IMS).

Contribution rates for workplace accidents and occupational diseases vary among employers based on their industry sector and operations.

Under the workplace accidents and occupational diseases contribution rates schedule in effect since Jan. 1, 2019, which was released by the National Social Security Institute, workplace accident and occupational disease program contribution rates for employers, when including contributions for the temporary disability component and the permanent disability, death, and survivors component range from 1.5% to 7.15%. Under the workplace accidents and occupational diseases contribution rates schedule in effect from 2016 to 2018, which was released by the National Social Security Institute, workplace accident and occupational disease program contribution rates for employers, when including contributions for the temporary disability component and the permanent disability, death, and survivors component ranged from 1% to 7.15%.

The monthly minimum and maximum tax bases for workplace accidents and occupational diseases in general respectively are the lowest monthly minimum tax base and the highest monthly maximum tax base in effect among those for the 11 professional categories in Group 1 regarding other types of social security contributions. The workplace accident and occupational disease minimum tax base and maximum tax base apply for all employers regardless of their professional category.

Effective for 2021, unchanged from 2020, for workplace accident and occupational disease contributions assessed on employers, the minimum tax base is €1,050 per month and the maximum tax base is €4,070.10 per month.

Registration: All employers must enroll in the Social Security system and obtain a Social Security number for every province where they operate by submitting Form TA.6 - Application to join the social security system and Form TA.7 - Application for affiliation, termination, and data changes for a contribution account to the National Social Security Institute. Registration should be completed before the onset of commercial activities.

Additionally, all employers should register their workers in the Social Security system by submitting Form TA.8 - Application to change a worker’s contribution account to the National Social Security Institute within six days of the date of hire.

Separate registration requirements exist for sea workers, agricultural workers, and coal mining workers.

Taxable Amounts: Types of payments upon which social security contributions may be assessed generally are the same as those upon which incomes taxes may be assessed.

Among the types of payments upon which social insurance contributions may be assessed are cash, vouchers or any type of check that employees can use to purchase goods, rights or services, pension plan contributions, stock payments, and payments made to insurance companies to cover workers.

Social Security contributions for payment in kind are generally calculated in accordance with the “average cost” to the employer for offering these goods, rights, or services. Exceptions to the general rule for calculation include payments in the form of educational services for children of employees; company-run daycare for employees’ children; the use of vehicles or residential dwellings; and below-market loans to employees.

At the same time, the rules exclude certain types of expenses from the contribution base. These include, for example, living, accommodation, and transportation expenses for employees sent away from their normal workplace to perform the same work functions elsewhere; payments for worker education or training when necessitated by the nature of the job or the development of job-related activities; company Social Security contributions for temporary worker incapacity; and indemnification for employee death, transfers, dismissals, or suspensions.

Returns and Remittance: Employers must make monthly Social Security payments and filings. To do so, employers must make Social Security payments by the end of the month following the month when remuneration was paid upon which the due social security contributions were assessed. Payments and filings can be made online or by cash, check, bank transfer, credit or debit card, and other methods. The Spanish government required an increasing number of companies to enroll in a direct payment system for companies making social security contributions for their employees.

The General Social Security Treasury (GSST) has a monthly process of directly billing employers for social security contributions, removing the necessity for employers to calculate contributions themselves.

Recordkeeping: Generally, all payroll documents related to Social Security payments should be kept for 10 years.

Penalties: Penalties for violations of the Social Security laws include:

A charge of 20% of taxes outstanding for late payments made after the regulatory period expires.
A charge of 20% of taxes due when employers fail to file within the regulatory period.
A charge of 35% of taxes due when employers fail to file and the government has begun forceful collection.
Interest fees will be charged to all late payments.

Other Taxes

Spain’s national government does not assess any taxes on employment income other than those covered in the Income Taxes and Social Taxes sections of this primer.

State/Jurisdiction Taxes

Two of Spain’s autonomous communities, Basque Country and the Chartered Community of Navarre, impose taxes on remuneration paid for individuals. Unlike the other 15 autonomous communities of Spain and the autonomous cities of Ceuta and Melilla, Basque Country and Navarre directly collect taxes.

Basque Country

Coverage: Employers must withhold personal income taxes of all Spanish residents who perform work or services in the autonomous community of Basque Country and of all Basque Country residents.

Rates and Thresholds: Income tax in the autonomous community of Basque Country is generally assessed on a scale ranging between 23 and 49%. While some types of tax provisions vary among the three provinces of Spain located in Basque Country, there is no variation among the three provinces regarding personal income taxation on employment income. The three provinces of Basque Country are Álava (Araba), Biscay (Vizcaya, Bizkaia), and Gipuzkoa (Guipúzcoa, Gipuzkoako).

Effective since Jan. 1, 2019, Basque Country’s personal income tax rates and minimum and maximum amounts of annual income for each tax bracket are as follows:

Range of Income for Tax Year (Euro)	Income Tax Rate
Up to €16,030	23%
More than €16,030 and up to €32,060	28%
More than €32,060 and up to €48,090	35%
More than €48,090 and up to €68,690	40%
More than €68,690 and up to €95,150	45%
More than €95,150 and up to €126,850	46%
More than €126,850 and up to €184,950	47%
More than €184,950	49%

In addition to the aforementioned rates, the tax authorities of the three provinces in Basque Country establish tables for income tax withholding on employment income, and the provinces sometimes choose to implement the same income tax withholding tables as each other. When multiple provinces choose to use the same income tax withholding tables as each other, the jointly applicable tables are released by Basque Country’s Directorate of Tax Administration (Dirección de Administración Tributaria).

The tables released Dec. 23, 2020, by the government of the province of Biscay have been applicable to income tax withholding in Biscay since Jan. 1, 2021. The tables released Dec. 30, 2020, by the government of the province of Álava have been applicable to income tax withholding in Álava since Jan. 1, 2021. The tables released Jan. 21, 2021, by the government of the province of Gipuzkoa have been applicable to income tax withholding in Gipuzkoa since Jan. 1, 2021.

Registration: All employers must submit Form 36: Declaration of Registration, Modification, and Removal in the Census of Employers (Declaración censal de alta, modificación y baja en el censo de Empresarios, Profesionales y Retenedores) and obtain a Tax Identification Number (Numero de Identificacion Fiscal, NIF) from the provincial delegation of the Tax Agency, before initiating commercial activities. Employers also are required to register with Basque Country’s tax authority in the province where the employee resides.

Taxable Wages: Taxable wages are calculated as all remuneration paid minus allowable deductions, such as deductions for dependents, disability, social security payments, and other pension payments.

Returns and Remittance: Payment and reporting obligations vary according to withheld amounts. Employers whose revenues exceeded €6,010,121.04 in the previous year must make monthly income tax payments while all others must make quarterly payments. Monthly payments are due by the 25th of every month for withheld amounts from the previous month, while quarterly payments are due the 25th of January, April, July and October. Along with monthly payments, employers must complete Form 109: Income Tax for Individuals, and submit it to the Basque Country tax authority.

Additionally, all employers must file annual returns by Jan. 31. To file, employers should submit an Annual Summary of Income and Withholdings, or Form 190. Employers must also provide all employees with a certificate detailing all withholdings performed in that year by Jan. 20.

Recordkeeping: Records generally should be kept for five years.

Penalties: Employers who do not remit taxes in time are subject to a fine of 5% of the taxes due for that period. If taxes are not paid within six months of being due, an additional 5% penalty is assessed. If taxes are not paid within one year of being due an additional 10% penalty is assessed.

Navarre

The tax burden in Navarre may not be lower than that in the rest of Spain.

Coverage: Generally, residents of the autonomous community of Navarre are subject to income tax on their global income, while residents of other Spanish territories are subject to Navarre income tax on their income from Navarre sources.

Rates and Thresholds: Generally, income tax in Navarre is assessed on a progressive scale ranging between 13% and 52%.

Navarre’s personal income tax rates and minimum and maximum amounts of annual income for each tax bracket are as follows:

Range of Income for Tax Year (Euro)	Income Tax Rate
Up to €4,000	13%
More than €4,000 and up to €9,000	22%
More than €9,000 and up to €19,000	25%
More than €19,000 and up to €32,000	28%
More than €32,000 and up to €46,000	36.5%
More than €46,000 and up to €60,000	41.5%
More than €60,000 and up to €80,000	44%
More than €80,000 and up to €125,000	47%
More than €125,000 and up to €175,000	49%
More than €175,000 and up to €300,000	50.5%
More than €300,000	52%

Navarre has a separate set of rates is in effect for income tax withholding from employment income, with the income tax withholding tables available in the autonomous community’s applicable Regulation of the Tax on the Income of Physical Persons (Reglamento del Impuesto Sobre la Renta de Las Personas Físicas). The withholding tables are available on pages 42 and 43 of the applicable regulation currently in force. Each withholding bracket applies to an amount of annual income, with the income tax withholding rate for an employee based on the individual’s number of children or other dependents. In general, for each income tax withholding bracket, there is an inverse relationship between the number of children an employee has and the applicable rate for that employee.

Registration: All employers must submit Form 36: Declaration of Registration, Modification, and Removal in the Census of Employers (Declaración censal de alta, modificación y baja en el censo de Empresarios, Profesionales y Retenedores) and obtain a Tax Identification Number (Numero de Identificacion Fiscal, NIF) from the Treasury of Navarre, before initiating commercial activities. This can be done by following the instructions on the Treasury of Navarre website.

Taxable Wages: Taxable wages are calculated as all remuneration paid minus allowable deductions, such as deductions for social security payments, professional society fees, union dues, and legal fees in connection with lawsuits against employers.

Returns and Remittance: All payments and filings should be submitted, electronically or physically, to the Ministry of the Treasury of Navarre.

All employers must remit taxes withheld on a monthly or quarterly basis, depending on the size of the business, and make annual filings. If required to make quarterly payments, employers must make must make payments by the 20th of the month following the end of the previous quarter, except second quarter payments, which must be made by Aug. 5, and the fourth quarter, when payments must be made by Jan. 31. Employers should file Form 715 with their quarterly payments and Form 745 with their monthly payments. Otherwise, employers must make payments by the 20th of every month. When the date falls on a Saturday or holiday, the due date will be move to the next business day.

Annual filing is required. All employers should submit Form 190 to the Ministry of the Treasury of Navarre annually.

Recordkeeping: Generally, all tax related documents should be kept for four years.

Penalties: The amount of penalty typically varies according to the offense committed. For simple offenses, the penalty ranges from €6 to €6,010. Simple offenses are described as violations of formal obligations that do not cause a decrease of income, such as failing to provide relevant information. For serious offenses, the penalty ranges between 75 and 180% of outstanding taxes. Serious offense are described as violations that lead to a decrease in income, such as failing to remit taxes and providing falsified information.

Surcharges ranging from 5% to 20% are imposed for late payment where payment is made voluntarily by the taxpayer without investigation by the tax authorities. Interest is also imposed where the payment is more than one year overdue.

COMPENSATION AND BENEFITS

The essential governing framework of Spanish employment law includes the Statute of Workers (SW), the Royal Legislative Decree 1/1995, Occupational Risk Prevention Law of 1995, the Labor Procedure Law of 1995, the Law of Social Security of 1994, and others.

All relevant labor laws are published regularly in the Labor Guide and the laws are administered by the Ministry of Labour and Social Economy. The ministry promulgates regulations on issues regarding minimum wage, overtime, hours of work, holidays, leave, wage payment, termination pay, and worker’s compensation.

Spain’s pension system consists of Social Security (as described above) and voluntary private pension funds.

The Ministry of Labour and Social Economy regulates, among other things, basic employment rights and duties, elements and types of employment contract, amendment, suspension and termination of an employment contract, employees’ rights to collective representation and concerted activity, collective negotiation and collective bargaining agreements, and labor infringements.

Minimum Wage

Effective starting Sept. 1, 2021, the minimum wage in Spain is €32.17 per day, or €965 per month, or €13,510 per year. The official monthly minimum wage of €965 is designed to accommodate 14 payments for a year, while the unofficial but prorated and commonly accepted monthly minimum wage to accommodate 12 payments for a year is €1,125.83. The minimum wage will increase from €24 to €40 in 2022 and from €25 to €40 in 2023 until it reaches €1,049 per month in 2023.

Effective from Jan. 1, 2020 to August 31, 2021, the minimum wage in Spain was €31.66 per day, or €950 per month, or €13,300 per year. For 2020, the official monthly minimum wage of €950 was designed to accommodate 14 payments for a year, while the unofficial but prorated and commonly accepted monthly minimum wage to accommodate 12 payments for a year was €1,108.33.

In Spain, the minimum wage often is referred to by the acronym SMI, which is an abbreviation of the Spanish phrase salario mínimo interprofesional, which translates to interprofessional minimum salary.

Overtime

Generally, Spain mandates that overtime be paid for work in excess of nine hours a day and 40 hours a week. Compensation for overtime pay is set by individual or collective agreements, but must exceed compensation for normal time worked. In the absence of such an agreement, overtime work must be compensated with equivalent leave within four months of overtime work. Overtime is limited to 80 hours a year and may not be performed by minors. Additionally, all employers must notify employees of the amount of overtime work performed each month.

Hours of Work

Spanish law regulates all hours worked and places specific regulations on night work and shift work. Generally, working hours are limited to nine hours a day and 40 hours per week, subject to labor agreements. In the absence of a labor agreement, employers may require irregular work for a maximum of 10% of the year, so long as the average hours worked doesn’t exceed 40 hours a week.

Employers must provide workers with a minimum of 12 hours off between work shifts. When a daily shift exceeds six hours, employers must provide workers with a minimum of 15 minutes of rest. In the case of workers under the age of 18, when a daily shift exceeds four hours and 30 minutes, the rest period must be a minimum of 30 minutes. Also, employers must provide all workers with a day and a half of weekly rest, of which one day must be Sunday and the half day either Saturday or Monday. For workers under the age of 18, the weekly rest period must be two full days.

Night work is considered work between the hours of 10 p.m. and 6 a.m. All night work may not exceed an average of eight hours per day in a 15 day period. Generally, employers cannot assign employees performing night work to perform overtime work as well. All night work must be reported to the Labor Authority.

Shift work is defined as teamwork where workers successively occupy the same job, with a certain rhythm, and where workers are required to work different days or hours within a given time period. Employers who operate 24 hours a day and require shift work, must keep a shift schedule and ensure that no workers performs more than two consecutive weeks of night work, unless they do so voluntarily. Shift workers may forgo their weekly day of rest for four consecutive weeks and take the time off another time. If shift workers are unable to take their required rest period between work periods, the rest period may be reduced by five hours so long as the rest is given in the following days.

Employers may be exempted from these regulations with the approval of the Ministry of Labour and Social Economy.

Holidays

Four paid public holidays are generally observed in all of Spain’s autonomous communities, and communities may observe additional paid holidays within their jurisdiction, subject to an annual limit of 14 holidays. The holidays generally observed in all communities are:

Jan. 1: New Year’s Day.
May 1: Labor Day.
Oct. 12: Spanish National Day.
Dec. 25: Christmas.

The number of holidays observed as paid holidays in all of Spain’s autonomous communities varies from year to year.

Holidays traditionally identified by many of the autonomous communities as paid holidays include:

Jan. 6: Epiphany.
March 19: St. Joseph’s Day.
Holy Thursday, the Thursday before Easter Sunday.
Good Friday, the Friday immediately before Easter Sunday.
July 25: St. James’ Day, also known as National Day in Galicia.
Aug. 15: Assumption.
Nov. 1: All Saints’ Day.
Dec. 6: Constitution Day.
Dec. 8: Immaculate Conception.

When public holidays fall on Sundays, the following Monday may not be a holiday in all communities.

Charts of holidays observed by Spain’s autonomous communities in 2022 and 2021 were published by the Ministry of Labour and Social Economy.

Leave

Employees are entitled to a minimum of 30 calendar days of annual leave in addition to public holidays, which can be increased by collective agreements or by individual employment contracts. Leave entitlement is reduced proportionally for periods of employment under a year. Unused leave does not generally carry forward to the next year, although there are exceptions to this rule (e.g., pregnancy or maternity leave). Payment in lieu of leave is not permitted, except on termination of the employment contract.

Sick leave: All employees who are unable to work because of an accident or illness are paid at least 60% of income during their absence. The employer normally pays the employee this sick pay and then is reimbursed by the National Social Security Institute (ISSN). Maximum sick leave is 18 months.

Marriage leave: Employers must provide all employees with 15 days of paid leave in the case of marriage.

New residence leave: Employers must provide all employees with one day of paid leave in the case of a change of residence.

Civic duty leave: Employers must provide all employees with paid leave for the time required to complete civic duties, subject to labor agreements.

Union leave: Employers must provide all employees with paid leave for the time needed to execute union duties and worker representation.

Paid parental leave: Employers must give pregnant employees the right to paid leave for a prenatal examination or preparation for childbirth, provided prior notice is given to the employer.

Additionally, workers are entitled to 16 weeks of maternity leave, payable by ISSN, after the birth of a child. Of these 16 weeks, six must be taken by the mother immediately after the child’s birth and up to four may be taken before childbirth if the mother chooses to do so.

Effective starting Jan. 1, 2021, the period of paternity leave paid by ISSN matches the period of maternity leave, including that both parents must take six weeks of leave immediately after the child’s birth, with no available transfer of leave between parents. Effective for 2020, the period of paternity leave after childbirth was 12 weeks, of which four were to be taken immediately, and the mother could transfer up to two weeks of maternity leave to the father. In cases of adoption or foster care, both parents receive six weeks of leave that must be taken immediately after the adoption or start of foster care, and an additional 16-week period of leave shared by both parents, of which one parent may take a maximum of 10 weeks.

During maternity and paternity leave, the employment contract is suspended but the employment relationship continues. Maternity and paternity leave must be taken within 12 months after childbirth, adoption, or the start of foster care. Paternity leave is independent of shared maternity leave in cases of childbirth.

Wage Payment

Employees must be paid on a monthly basis or shorter. Payment must be made in legal tender, check, or bank deposit. Late payments can be assessed interest at a 10% annual rate.

Bonuses and Special Benefits

In addition to normal salary, employers must pay all employees two bonuses on an annual basis. Both payment dates should be set by labor agreements. Customarily, one of the bonuses is given during the Christmas season.

Along with all payment, employers must provide workers with a receipt of payment detailing all payments and withholding. A copy of the receipt should be signed and returned to employers. When making payments in the form of bank deposits, bank receipts can substitute for signed payments receipts. Generally, employers should keep signed receipts and bank receipts for four years.

Termination Pay

In all cases of dismissal, employers must provide employees with written notice of dismissal (including effective date and the cause) 15 days in advance, although pay in lieu of notice is allowed. Employers who unjustly terminate employees must pay those employees severance pay ranging from a minimum of 20 days’ salary for each continuous year of employment capped at one year’s salary, to a maximum of 45 days’ salary for each year of employment, up to a cap of 42 months. In addition, employers are required to pay salary accrued during the trial period. Severance pay judgments are handed down by the Labor Court.

Employees unfairly terminated are entitled to the following monetary awards: severance pay calculated as 20 days’ salary for each continuous year of employment up to a maximum of one year’s salary and six hours of paid leave per week during the advance notice period in order to find a new job.

Dismissal review: If, after a Labor Court’s dismissal review, it is ruled that there is inadequate proof of the cause of dismissal or the cause does not justify dismissal, the employer has five days from receiving notice of the Labor Court’s decision to either reinstate the employee or pay severance compensation equal to 45 days’ salary for each consecutive year of employment, up to a maximum of 42 months. In addition, the employer is required to pay salary accrued during the judicial procedure. If the ruling makes the dismissal null and void because the dismissal was ruled as being discriminatory or was in violation of the employee’s fundamental rights, the employer must immediately reinstate the employee and pay accrued salary.

Workers’ Compensation

Employees may receive workers’ compensation from ISSN under the Social Security system. Further coverage by employers is not required.

Recordkeeping

Effective since May 1, 2019, employers in Spain must keep an hourly record of their employees, which must include the start and end times of each employee’s workday. Previously, employers were required to keep records only for part-time employees. Employers can select an electronic system to fulfill the reporting requirement and must consult with their employees before implementing the system.

Employers must keep the records for four years and must make them available upon request to employees, their representatives, and the Ministry of Labour and Social Economy.

FOREIGN WORKERS

Foreign workers are entitled to the same rights and covered by the same workplace laws as Spanish citizens, but are subject to differing tax laws.

Visas: Visa requirements in Spain differ based on whether workers are citizens of EU countries, Schengen Agreement countries, or neither. Citizens of the EU, Iceland, Liechtenstein, Norway, and Switzerland do not need a Visa to work in Spain.

Foreign workers from non-Schengen Agreement countries travelling to Spain for business for a period of less than 90 days may obtain a Schengen Business Visa. This visa allows individuals to conduct business in any of the parties of the Schengen Agreement for up to 90 days. Residents of some countries, such as the United States, do not need to obtain Schengen Business Visas in order to enter and conduct business in Spain for up to 90 days.

Generally, foreign workers who are citizens of non-EU countries and wish to travel to Spain as an employee must obtain a National Visa and a Residence and Work Permit. To do so, the foreign worker’s Spanish employers must apply for Residence and Work Permits at the Spanish consular office where the foreign resident resides. Once the permit has been granted, employees must apply for a National Visa at the same consular offices. After employees have obtained Work Permits and visas and entered Spain, employers must register them with the Social Security system within three months. Within one month of being registered with Social Security, foreign workers must apply in person for a Foreigner’s Identification Number (NIE) at a Spanish consular office. National Visa’s expiration varies depending on the declared purpose of journey, as declared on the National Visa application.

Taxes: Nonresident individuals are exempt from paying Personal Income Tax (IRPF), but instead must pay Income Tax on Nonresidents (Impuesto sobre la Renta de los no Residentes, IRNR) on all Spanish sourced income. This includes income from the Basque Country and Navarre.

Employers must withhold IRNR from each foreign employee’s paycheck.

Effective starting Jan. 1, 2021, foreign employees who are not residents of an EU member country or of a European Economic Area country are taxed at an income tax rate of 24% on annual income of up to €600,000, while annual income of more than €600,000 is assessed an income tax rate of 47%. Effective until Dec. 31, 2020, the income tax rate for annual income of more than €600,000 was instead 45%.

Foreign employees who are residents of an EU member country or of a European Economic Area country are taxed at a flat rate of 19%.

Employers must remit the tax to the tax authority by the 20th of each month. Additionally, employers must make annual filings by submitting Form 296 to the Tax Authority by Jan. 20, if filing in physical form, or by Jan. 31, if filing electronically.

If a foreign employee is active in a share plan but leaves Spain, the income derived from the plan will be taxed at a 19% flat rate.

Wages/Payments: Foreign workers’ wages are subject to the same regulations as residents’ and, like residents, foreign workers may have their wages paid in any legal tender.

WORKING IN THE UNITED STATES

Foreign workers from Spain must meet general visa requirements and be certified to be employed in the U.S. General visa requirements for the U.S. are included in the separate

Spain is eligible for the visa waiver program for business visitors, which allows Spanish citizens to travel to the U.S. for 90 days or less for business-specific purposes without having to obtain a B-1 business visa. Stays longer than 90 days will require a visa. Individuals may return to the U.S. under the visa waiver program if a “reasonable length of time” has passed. The determination for a reasonable length of time is at the discretion of the Department of Homeland Security.

Spanish workers are eligible to work in the U.S. under H-2B visas, which cover labor or services of a temporary or seasonal nature in occupations other than agriculture or registered nursing. The number of H-2B visas issued each year is limited by U.S. law.

U.S. employers also must check the names of all new-hires and employees against the Specially Designated Nationals and Blocked Persons List, administered by the Treasury Department’s Office of Foreign Assets Control (OFAC). Because OFAC prohibits financial transactions with individuals on the list, employers cannot employ them and may face fines for failing to comply.

For tax purposes, Spanish citizens are subject to U.S. employment-based taxation on income earned in the U.S. unless they can claim an exemption under certain tax treaty provisions or they work under specific visa types that exempt earnings from taxes. Spain has both a tax treaty and a social tax totalization agreement with the U.S.

State and local taxation of Spanish workers also can apply, although some states within the U.S. recognize international tax treaties that can eliminate that income tax liability for foreign workers.

The U.S. labor laws apply to all workers employed and providing services in the country.

Work eligibility as an employee is contingent upon Department of Homeland Security and Labor Department approval and the employee receiving a U.S. Social Security number from the Social Security Administration.

Tax Residency: In general, employees working in the U.S. on a temporary basis are considered nonresidents for tax purposes unless they qualify for resident status. Employees can be granted permanent resident status through the so-called green card test or if they meet the substantial presence test under the U.S. tax code. More information on these requirements is in the

Permanent residents are subject to U.S. tax requirements the same as U.S. citizens and are taxed under the U.S. system on their worldwide earnings.

Income Taxes: Generally, nonresidents in the U.S. who are from Spain and are working in the U.S. are subject to U.S. taxes based on their U.S.-sourced income. Income is taxed differently based on whether it is categorized as wage income or nonwage income, which includes interest and dividends.

A Form W-4, Employee’s Withholding Certificate, must be filed by each employee with their employer. All nonresidents in the U.S. who are from Spain and are working in the U.S. must claim “single” in Step 1c, regardless of marital status; write “Nonresident Alien” or “NRA” in the space under Step 4c of the form; and may not claim “exempt” in the space under Step 4c.

Nonresident alien employees may adjust withholding using Step 2b or 2c of the Form W-4; certain employees also may be able to use Steps 3, 4a, or 4b. More information about Form W-4 requirements for nonresident alien employees is available in the

Although the versions of Form W-4 issued in 2020 or later significantly differ from the versions issued in 2019 or earlier, nonresident employees that filed a valid version of Form W-4 from 2019 or earlier with their employer do not need to file another Form W-4 with the employer unless they need to implement a change for their withholding. On Forms W-4 issued in 2019 or earlier, nonresident alien employees were required to check the “single” box on line 3, regardless of marital status; write “Nonresident Alien” or “NRA” above the dotted line on line 6; and were not permitted to claim “exempt” on line 7 of the form.

Nonwage income and self-employed foreign workers can be subject to income tax withholding at a flat rate of 30%.

Additionally, foreign workers may be taxed differently based on the specific type of visa they hold.

Tax treaties: Spain and the U.S. have a tax treaty with provisions addressing host country taxation of nonresident workers. A summary of those benefits is listed in the Tax Treaty Exemption Comparison Chart. To claim the treaty benefit, the nonresident must file Form 8233, Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual, with the employer.

Students and trainees in particular must include a statement with Form 8233 to claim a tax treaty exemption from withholding of tax on compensation for dependent personal services. This statement affirms that the student or trainee is temporarily in the U.S. for purposes of studying or has accepted an invitation by the U.S. government (or by a political subdivision or local authority) for the purpose of securing training or engaging in public interest research for a period not expected to exceed five years by a university or other recognized educational institution in the U.S. It also must affirm that the individual will receive compensation for services performed in the U.S. The student and/or trainee exemption is not to exceed $5,000 a year for Spanish residents. Employees resident in Spain who are temporarily in the U.S. for the purpose of acquiring technical, professional, or business experience, or studying at a university or other recognized educational institution also are granted an income tax exemption not to exceed $8,000 a year.

Examples of the statements necessary to claim a treaty exemption from U.S. taxes are included in Internal Revenue Service Publication 519, U.S. Tax Guide for Aliens.

Social Taxes: Most foreign workers are subject to paying into the U.S. Social Security system. Foreign nationals who are exempt from paying income tax and who do not have the eligibility to receive a social security number may not be required to pay social taxes. Foreign workers contributing to Social Security for a certain time period may be eligible to receive benefits.

Generally, foreign workers in the U.S. that have specific visas as exchange visitors or students or who are temporarily in the U.S. for agricultural work are not subject to social taxes on income that is obtained from the purpose in which they originally entered the U.S.

Totalization Agreements: Social Security totalization agreements can allow foreign workers and U.S. nationals working abroad to avoid paying into two social security systems while being subjected to losing benefits for their home country system. Under totalization agreements, generally, foreign workers will only pay into one of the social security systems, either the home or the foreign system, but not both. Foreign nationals, utilizing a totalization agreement, also can count years of contributions paid to different social security systems to all of the systems they have contributed to in order to be eligible for benefits in one country.

Spain and the U.S. have entered into a totalization agreement and a summary of those provisions is included in

Wage Payment: Under certain visas for certain types of employment, employers are required to pay foreign workers the higher of either the prevailing wage or the actual wage that is paid to U.S. workers that have similar skills and qualifications.

There are no particular requirements that employees be paid in U.S. dollars.

TREATY ARRANGEMENTS

Spain has entered into more than 90 income tax treaties, including an income tax treaty with the United States. Spain also has more than 35 totalization agreements for social tax coverage purposes, including an agreement with the United States.

Spain’s tax treaties are available in

RESOURCES

All resources in English unless otherwise noted.

General

Government of Spain (Spanish)

CIA World Factbook: Spain

U.S. State Department: U.S. Relations With Spain

Currency Details

Unicode Consortium: Currency Symbols

International Organization for Standardization: Currency Codes - ISO 4217

United Nations: United Nations Terminology Database: Spain

Taxes

Tax Agency (Spanish)

Personal Income Tax Law (Spanish)

Law of the General Budget of the State for the Year 2021, tit. VI, ch. I (B.O.E. 2020, 11) (Spanish)

Income Tax Law of Navarre (Spanish)

Navarre Treasury (Spanish)

Basque Department of Treasury and Economy (Basque and Spanish)

National Securities Market Commission (Spanish)

Compensation and Benefits

Labor Guide (Spanish)

Workers’ Statute (Spanish)

Ministry of Labour and Social Economy (Spanish)

National Social Security Institute (Spanish)

Royal Decree-Law 6/2019 of March 1, 2019 (Spanish)

Royal Decree-Law 8/2019 of March 8, 2019 (Spanish)

Royal Decree 817/2021 of Sept. 28, 2021 (Spanish)

Council of Ministers, Extension of 2020 Minimum Wage into 2021 (Spanish)

Foreign Workers

Secretary of State for Migration (Spanish)

Working in the United States

U.S. Internal Revenue Service:

IRS Notice 1392, Supplemental Form W-4 Instructions for Nonresident Aliens
IRS Publication 15, Circular E, Employer’s Tax Guide
IRS Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities
IRS Publication 519, U.S. Tax Guide for Aliens
IRS Publication 901, U.S. Tax Treaties

U.S. Labor Department, Foreign Labor Certification

Hiring Foreign Workers

U.S. Department of State, Visa Waiver Program

Treaty Arrangements