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Payroll in Spain: Employer costs, taxes & more in 2026

Learn everything you need to know about Spain’s payroll, including how to pay employees in Spain, employer payroll taxes in Spain, minimum wage, and more.

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Payroll in Spain: Employer costs, taxes & more in 2026
Payroll in Spain: Employer costs, taxes & more in 2026

Payoneer Team

Payroll in Spain is processed monthly, with employers responsible for calculating salaries, withholding Personal Income Tax (IRPF) and Social Security contributions, and remitting them to the relevant authorities. Employers must also comply with statutory payroll requirements, including paid annual leave, public holidays, overtime rules, and mandatory salary payments. Keeping payroll accurate and up to date is essential for complying with Spanish labor and tax laws.

An EOR in Spain is not a legal model if you are hiring employees without establishing a local entity. However, an ETT-licensed workforce management platform can help manage hiring and payroll on your behalf. 

Payoneer Workforce Management helps run compliant payroll in euros, calculates and withholds taxes and Social Security contributions, and files with the relevant authorities.

Book a demo today!

How does payroll work in Spain?

Payroll in Spain is processed every month, with employees receiving their salary on the last working day of each month. On top of base pay, employers need to handle paid annual leave, public holidays, sick leave, and Spain’s common practice of paying salaries in 14 installments per year. 

Partnering with a workforce management platform helps employers handle these payroll processes on their behalf while staying compliant with Spanish laws. 

Know more about partnering with a workforce management platform in Spain.

What is the payroll cycle in Spain?

Spanish employers operate on a monthly payroll cycle and pay their employees on the last working day of each month.

Employees in Spain are typically paid in 14 installments across the year. These are known as the 13th- and 14th-month bonuses. For most employees, these additional salary payments  are typically paid in July and December and are mandatory under Estatuto de los Trabajadores (Workers’ Statute) by the Ministry of Labor and Social Economy (MITES)

What is the minimum wage in Spain?

The minimum wage in Spain is EUR 1,221 per month. 

If an employee is made to work more than the normal 40 hours per week, this is classed as overtime. Any overtime must be compensated by the employer either through rest periods over the next 4 months or additional pay, with an annual cap of 80 hours of overtime. The rate for additional pay is typically 1.75 times the normal wage.

What is the sick pay in Spain?

Employees in Spain are entitled to paid sick leave when a medical condition prevents them from working. The first three days of sick leave are typically unpaid. From day 4 to day 15, the employer is responsible for paying the sick leave benefit.

From day 16 onward, payments are usually covered by Spain’s Social Security system, subject to eligibility requirements.

Sick pay is generally calculated as a percentage of the employee’s contribution base. In cases of common illness or non-work-related accidents, employees typically receive 60% of their contribution base from day 4 to day 20 and 75% from day 21 onward.

Employees with at least 180 days of Social Security contributions in the last 5 years are entitled to paid sick leave for up to 365 days, extendable for an additional 180 days. Otherwise, they may be on unpaid medical leave. This means employees may receive sick leave benefits for up to 545 days (approximately 18 months).

What are the rules for maternity and paternity pay in Spain?

In Spain, new parents are entitled to 19 weeks of paid leave at 100% of their normal wage to care for their baby (6 weeks mandatory to be taken immediately after birth + 11 weeks flexible + 2 weeks that can be taken until the child is 8 years old). This is paid by the Spanish social security system and not by the employer’s Spanish payroll budget.

What are the severance packages in Spain?

Employees in Spain are generally entitled to severance pay when dismissed for objective reasons, such as economic, technical, organizational, or production-related grounds. In these cases, severance is typically 20 days’ salary per year of service, capped at 12 months’ salary.

Additional rules and compensation amounts may apply depending on the reason for termination and the employee’s circumstances.

Are 13th and 14th-month salary payments mandatory in Spain? 

Yes, 13th and 14th-month salary payments are mandatory for employees in Spain’s payroll system, meaning that their salary must be paid in 14 installments across the year. The additional 13th and 14th payments are typically paid in July and December each year.

If you’d like to know more about the leave policies in Spain, check out our detailed guide on the leave policies in Spain.

What are the taxes, contributions, and deductions for payroll in Spain?

Payroll in Spain includes three main components: personal income tax (IRPF), employee and employer social security contributions, solidarity, and other contributions. Employers must withhold the appropriate income tax and employee social security contributions from wages and remit them to the relevant authorities, while also paying their own employer contributions.

How is the income tax collected in Spain?

In Spain, the employer must withhold income tax from their employees’ salaries. Spain’s payroll taxes are calculated based on applicable tax brackets. Refer to the table below for a better understanding.

Employee’s annual salaryIncome tax rate
EUR 0 to 12,45019%
EUR 12,451 to 20,20024%
EUR 20,201 to 35,20030%
EUR 35,201 to 60,00037%
EUR 60,001 to 300,00045%
EUR 300,000+47%

Note: On top of the national tax, there’s also a regional tax applied by each autonomous community in Spain. These rates vary between regions. 

What are the solidarity contributions in Spain?

Spain introduced an additional solidarity contribution (cuota de solidaridad) from 1 January 2025 for employees whose earnings exceed the maximum Social Security contribution base. From 2026, the maximum contribution base is EUR 5,101.20 per month, and the solidarity contribution applies only to the portion of salary above that threshold. 

The solidarity contribution is applied as follows:-

Salary Above the Maximum Contribution BaseTotal RateEmployer ShareEmployee Share
Up to 10% above the base (€5,101.20 – €5,611.32) 1.15%0.96%0.19%
Between 10% and 50% above the base (€5,611.33 – €7,651.80) 1.25%1.04%0.21%
More than 50% above the base (€7,651.80+)1.46%1.22%0.24%

Note: these additional contributions do not generate extra pension rights for employees.

For the latest thresholds and contribution rates, employers should check the latest notifications by the Spanish Social Security authority (TGSS).

What are the social security and other contributions in Spain?

In addition to income tax and any applicable solidarity contributions, both employers and employees in Spain must make Social Security contributions. These contributions fund public benefits such as healthcare, pensions, unemployment protection, workplace injury coverage, and vocational training. Employers are responsible for withholding employee contributions through payroll and remitting both employee and employer contributions to the Social Security authorities.

The main Social Security contributions include:

  • Common contingencies (healthcare, pensions, sickness, maternity, and related benefits)
  • Unemployment contributions
  • Professional training contributions
  • Occupational accident and disease insurance
  • FOGASA (Wage Guarantee Fund) contributions
  • Intergenerational Equity Mechanism (MEI) contributions

For the latest contribution rates and bases, employers should consult the official Spanish Social Security authority. 

Get a better idea of employee costs in Spain with our cost calculator.

What are the best practices for payroll compliance in Spain?

There are several best practices to help you stay compliant when setting up your payroll.

Spanish employers should always:

  • Monitor tax law changes, labor laws, and statutory requirements
  • Perform occasional payroll audits to identify any errors
  • Provide ongoing payroll training to staff

You must also comply with all mandatory tax deadlines in Spain. 

Check our detailed guide on employment laws in Spain for more information.

 How to pay employees in Spain?

There are three ways to pay employees in Spain:

  1. Set up a local entity: This allows you to establish a legal business presence in Spain, but it can be a complicated and time-consuming process.
  2. Hire contractors: Instead of hiring employees, you may work with self-employed contractors and pay their invoices via payment platforms. They must not act like employees, or you could risk misclassification fines.
  3. Use a Workforce Management platform: An EOR is not allowed in Spain, so you can use a Workforce Management platform to facilitate the payroll cycle and assist with navigating local requirements and paying employees in Spain accurately and on time with compliance support.

How does Payoneer Workforce Management support hiring and payroll in Spain?

Payoneer Workforce Management operates as a temporary employment agency in Spain and helps businesses hire and simplify payroll administration in Spain, supporting payroll processing, statutory contributions, tax withholdings, and local compliance requirements in Spain without the complexity of establishing a local entity. 

From onboarding and payroll administration to compliance support and workforce management, it streamlines the employment process so you can focus on growing your business. 

Payoneer Workforce Management platform services start at $249 per employee per month, with final pricing depending on headcount and contract structure. 

Hire and pay employees in Spain with Payoneer Workforce Management. 

Book a demo today!

Frequently asked questions (FAQs)

Employers typically pay employees in Spain on the last working day of each month. When you set up a Spain payroll, you need to account for several mandatory contributions and deductions. These include income tax and social security contributions.

Yes, it is mandatory to pay most Spanish employees in 14 salary installments across the year. The additional 13th and 14th payments are typically paid in July and December.

To calculate your Spain payroll, begin with the employee’s gross salary. You must then deduct any mandatory employee contributions before subtracting income tax based on progressive rates. The final total is the employee’s net salary. Try out our employee cost calculator for a detailed breakdown of employment costs.

Spain uses a progressive income tax system, which means the more an employee earns, the higher the tax rate they may pay. Income tax rates range from 19% for lower-income earners to 47% for income above EUR 300,000.

Employers must withhold income tax (IRPF) from employee salaries through payroll and pay it to the Spanish Tax Agency. The exact amount withheld depends on factors such as the employee’s salary, place of residence, and personal circumstances.

The current minimum wage in Spain is €1,221 per month, and the current minimum annual wage in Spain is EUR 17,094.

Spanish employment laws state that employees must receive 2 additional mandatory payments a year, known as 13th and 14th-month pay. Most employers divide their employees’ yearly salary into 14 payments, with employees usually receiving double payments in July and December. 

An employee on minimum wage will therefore be paid 14 installments of EUR 1,221 throughout the year.

The cost of hiring an employee in Spain includes the employee’s gross salary plus mandatory employer Social Security contributions, which generally add around 30 to 33% to payroll costs. For example, an employee earning a gross annual salary of €40,000 may cost an employer approximately €52,000 to €53,000 per year after statutory contributions are included. (Seguridad Social)

In addition to income tax, employers and employees in Spain must make Social Security contributions to fund healthcare, pensions, unemployment benefits, workplace injury protection, and vocational training. Employees whose earnings exceed the maximum Social Security contribution base of EUR 5,101.20 per month are also subject to an additional solidarity contribution, which is shared between employers and employees and applies only to the portion of salary above that threshold.

If an employer misses a payroll tax or Social Security filing deadline in Spain, they may face late payment surcharges, interest charges, and financial penalties. The longer the delay, the higher the potential cost. In some cases, non-compliance may also trigger inspections or enforcement actions by the tax or Social Security authorities.

To avoid penalties, employers should ensure payroll taxes and Social Security contributions are calculated, reported, and paid on time. For the latest rules and penalty amounts, employers should consult the Spanish Tax Agency and the Spanish Social Security authority (TGSS).

You can hire in Spain without your own legal entity by engaging independent contractors or by using a workforce management platform. For instance, Payoneer Workforce Management can legally employ workers on your behalf and make them available to your business. Your own entity may be needed for a long-term local presence.

About the author

Martyna Krawczyk

HR and Immigration Lawyer, Global HR Operations 

Martyna Krawczyk is an HR and Immigration Lawyer and Associate within the Global HR Operations team at Payoneer Workforce Management (formerly Skuad). She holds an LPC LL.M. from the University of Law in the UK and an Associate CIPD certification. Martyna also serves as Vice President of the Labour Law Association of Poland and was recognized at the Wolters Legal Hackathon 2024. Her areas of focus include international employment law, cross-border workforce compliance, and global immigration, supporting organizations in managing international workforces.

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Payroll in Spain: Employer costs, taxes & more in 2026
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