*Information updated in 2024
Payment of employees in a new country is a complicated operation for a company if it is not fully conversant with the employment regulations. To ensure that workers – the most valuable assets of the company – receive an appropriate salary, it is necessary to have an understanding of the employment and tax policies in the destination country, and it is particularly helpful to have the services of a global payroll supplier. When you embark on your project in Spain, with ROSCLAR at your side, you will never work alone.
Just as the company needs to be aware of possible changes in payroll regulation, employees need to have a clear understanding of the regulations affecting their payslips, and this is no easy task. However, the company is obliged to keep a correct record of its workers’ payroll. In the first place, because these records are the company’s accounting documents, but above all, so their employees are treated with all due care and paid fairly and promptly for their work. Here, we will give you some key insights into understanding and managing your workers’ payroll in Spain.
The payroll, a legal document
A payroll is a document with legal effects that condition law-related aspects of the company, and it is full of compulsory fields for each worker that will have to be taken into account in the financial records of the company.
Therefore, in order to calculate a payroll in Spain, first it is important to be familiar with the country’s employment laws, administered by the Ministry of Employment and Social Security. These laws include the key requirements regarding the hiring of employees, and they regulate aspects such as the minimum salary, extra hours, annual holidays and the type of employment contract.
It will also be necessary to have a knowledge of the tax laws relating to payments, with regard to which there are obligations incumbent on both the worker and the company.
Minimum salary
The minimum interprofessional salary in Spain for 2024 is €1.134 month. The annual sum is normally divided and specified in 14 payments a year.
Furthermore, each collective agreement establishes the minimum salaries according to the professional group.
Agreeing on a gross annual salary is a convenient solution for entrepreneurs, provided that they respect the minimum payments established both in the Workers’ Statute and the collective agreements.
Social Security contributions
In Spain, workers and employers must pay their contributions to the Social Security General Treasury (TGSS). To be specific, the company pays in its share and is also responsible for paying in the worker’s share, having deducted the corresponding sums from their salary. These contributions are set aside to cover the costs of healthcare, pensions on retirement, accidents in the workplace and unemployment benefit, among other things.
Taxation rates are variable and depend on the activity performed by the company. At present, the employer must pay an average and approximate monthly taxation rate of 32% of the contribution basis of the employee. In the case of temporary contracts, the rate is a little higher.
Income tax deductions
Companies are obliged to deduct the corresponding income tax (IRPF) from the salary of their employees based on their earnings, and to pay the sums deducted to Agencia Tributaria (AEAT), the Spanish tax authority.
These deductions are applied by means of a percentage to be calculated on the basis of the tax regulations, the annual working income of the employee and their family circumstances (dependents, be they parents or children, marital status…). This percentage can range from 0% to 47%.
It should be mentioned that, exceptionally, companies located in the Basque Country and Navarra must fulfil their tax obligations there, since these regions have their own tax systems.
We still have to cover the standard practice regarding weekly hours, holiday pay and leave from work. We will deal with these and other matters in the next post. However, if you cannot wait and you wish to contact us, we will answer your queries immediately.
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