Can you hire employees in Spain without a legal entity?

Yes, you can hire employees in Spain without setting up a local legal entity by using an Employer of Record (EOR). The EOR acts as the legal employer in Spain, while your company manages the employee’s day‑to‑day work. This allows you to hire compliantly without incorporating a Spanish subsidiary.

How long does it take to hire employees in Spain?

Hiring through an Employer of Record is significantly faster than setting up a legal entity. In most cases, employees can be onboarded within a few weeks, depending on the role, contract terms, and completion of required documentation.

What employment contracts are required in Spain?

Employment contracts in Spain must be in writing if they last longer than four weeks. Contracts are generally presumed to be indefinite unless clearly defined as fixed‑term. When hiring through an EOR, the provider prepares a locally compliant contract that reflects Spanish labor law and applicable collective agreements.

Can a PEO help hire contractors in Spain?

A PEO or EOR can support contractor engagement, but Spain has strict rules around worker classification. If a contractor operates under conditions similar to an employee, there is a risk of misclassification. Many companies choose an EOR employment model instead to reduce legal and financial risk.

How does payroll work in Spain?

Payroll in Spain is typically processed monthly. It includes gross salary calculation, income tax withholding, employee social security contributions, and employer contributions. When hiring through an EOR, the provider runs payroll on your behalf and ensures all statutory payments are made correctly.

How often are employees paid in Spain?

Employees in Spain are usually paid on a monthly basis. Some collective agreements require additional payments, such as 13th or 14th-month salaries, which are common in Spain. An EOR ensures the payroll structure aligns with local requirements.

Does a PEO manage taxes and social contributions in Spain?

Yes, a PEO or EOR manages income tax withholdings and both employee and employer social security contributions. This includes calculating amounts owed, submitting filings, and making payments to the relevant authorities.

Can payroll be run in local currency?

Yes, payroll in Spain is run in euros (EUR). Employees are paid locally in EUR, while the EOR can invoice your company in an agreed currency, depending on your commercial arrangement.

Is using an Employer of Record legal in Spain?

Yes, using an Employer of Record is legal in Spain when structured correctly. The EOR must act as the formal employer, comply with labor law, and meet all registration and reporting obligations. Reputable EOR providers operate fully within Spanish legal frameworks.

What labor laws apply to foreign companies hiring in Spain?

All Spanish labor laws apply, regardless of whether the hiring company is foreign or local. This includes rules on contracts, working hours, termination, severance, paid leave, and social security. An EOR ensures these laws are applied correctly from day one.

What are the risks of employee misclassification in Spain?

Misclassification can lead to back payments of social security contributions, fines, penalties, and potential claims from workers. Spain is particularly strict on employment status. Using an EOR reduces this risk by placing the employee in a compliant employment structure.

How does a PEO or EOR ensure compliance in Spain?

A PEO or EOR ensures compliance by: Issuing legally compliant employment contracts Registering employees with social security and employment authorities Applying correct tax and contribution rates Monitoring labor law changes and collective agreements Managing termination and severance processes correctly This significantly reduces legal and operational risk for foreign employers.

PEO & EOR services · Spain

Hire employees in Spain with an Employer of Record

Hiring in Spain through an EOR does not require setting up a local legal entity. EuroDev becomes the legal employer running payroll and compliance while you keep full operational control.

✓ No entity required

✓ Onboard in weeks

✓ Full compliance managed

Talk to our EOR experts today →

SPAIN · EMPLOYER COST SNAPSHOT

Avg. annual gross salary €28,294

Employer contributions ≈ 29.90%

Statutory annual leave 22 days

Standard work week 40 hrs

Source: EuroDev EOR payroll data for Spain, 2026.

PEO & EOR services · Spain

How hiring in Spain through EuroDev works

An Employer of Record lets your company hire in Spain without establishing a Spanish subsidiary or branch. EuroDev becomes the legal employer, while your company retains day-to-day operational direction.

Employee selection

You select the candidate you want to hire in Spain.

Contract setup

EuroDev drafts a locally compliant contract, aligned with labor law and applicable CBAs.

Payroll & tax

We run monthly payroll and report income tax and social security accurately.

Ongoing compliance

Employment administration, benefits, and paid leave managed continuously.

The decision

Direct expansion vs. partner-led market entry

Both paths are legitimate - the right one depends on how fast you need to move and how permanent your presence in Spain will be.

Most chosen

Employer of Record

When an EOR is the right choice

✓ You want to hire quickly without long setup times

✓ You are testing the Spanish market

✓ You plan to hire a small or distributed team

✓ You want to minimize legal and compliance risk

Local Entity

When a local entity makes sense

✓ You are building a large, long-term workforce in Spain

✓ You require a permanent commercial presence

✓ You want full internal control over payroll and HR

Employment contracts

Permanent and fixed-term contract rules

Spain assumes employment is indefinite by default - incorrectly structured temporary contracts can be automatically reclassified as permanent.

Contract type · default

Permanent (indefinite)

✓ No predefined end date

✓ Full statutory rights from day one

✓ Strong protection against unfair dismissal

✓ Statutory severance on dismissal

✓ Probation permitted within legal limits

Contract type · limited use

Fixed-term (temporary)

✓ Only for a genuine, justified temporary need

✓ Max. two consecutive contracts

✓ Max. duration: 24 months within 30

✓ Converts to indefinite beyond the limit

✓ Misuse risks penalties and reclassification

Termination, notice & severance

Spain has strong employee protection laws

Employment ”at will” does not apply when hiring through an EOR in Spain.
EuroDev guides you through termination procedures to ensure compliance.

15 days

Minimum statutory notice

20 days

Severance per year of service

12 mo.

Maximum severance cap

Probation

Probation periods

Not mandatory, but must be agreed in writing. Without a collective agreement, probation may run up to six months for qualified technical roles and two months for others. Either party may terminate without notice or severance during a lawful probation.

In practice

Notice & severance in practice

Notice may be extended by contract or collective agreement, and payment in lieu is permitted. No notice is required for gross misconduct, and no severance is owed for valid disciplinary dismissals.

Payroll & employer costs

What hiring through an EOR costs in Spain

Employer costs typically run around 29.90% on top of gross salary - covering all mandatory employer charges and statutory contributions.

Cost example

Estimated annual employment cost

Average annual gross salary €28,294.56

Employer contributions (≈29.90%) €8,488.37

Estimated total employment cost €36,782.93

Contribution breakdown

Mandatory employer contributions

Social security

23.60%

Employer unemployment contribution

5.50%

Salary Guarantee Fund (FOGASA)

0.20–0.60%

Professional training

0.60%

Total estimated

~29.90%

Registration

Social security registrations

✓ Registration with Social Security & Public Employment Service

✓ Monthly payroll and contribution reporting

✓ Withholding employee contributions

✓ Paying employer social security contributions

Working time

Working hours & overtime

✓ Standard schedule: 40 hours/week, 8 hours/day

✓ Legal overtime limit: 80 hours per year

✓ Usually governed by collective agreements (CBAs)

✓ Compensated financially or with time off

Paid leave & public holidays

Statutory leave entitlements in Spain

EuroDev ensures every leave entitlement is tracked and administered correctly, from vacation days to parental leave.

Vacation

Annual leave

22 days

✓ 22 business days or 30 calendar days

✓ One period must be at least two consecutive weeks

Statutory

Public holidays

14 days

✓ Up to 14 public holidays per year

✓ 10 national; remainder regional or local

Parental leave

Maternity leave

16 weeks

✓ First 6 weeks mandatory

✓ Remaining 10 weeks flexible

✓ Paid at 100% via Social Security

✓ Employer top-up not mandatory

Parental leave

Paternity leave

16 weeks

✓ First 6 weeks mandatory

✓ Remaining 10 weeks flexible

✓ Fully paid by Social Security

✓ +2 weeks for multiple births

Ready when you are

Hire employees in Spain with confidence

Local expertise · Global support

EuroDev helps international companies hire in Spain quickly, compliantly, and without unnecessary risk whether you're onboarding your first employee or expanding an existing team.

Talk to our EOR experts → Explore EOR services

What happens after you contact us? +

1 Share your hiring needs and expected timeline.

2 Receive a compliant employment setup plan.

3 Start contract preparation and employee onboarding.

FAQ's

: Yes, you can hire employees in Spain without setting up a local legal entity by using an Employer of Record (EOR). The EOR acts as the legal employer in Spain, while your company manages the employee’s day‑to‑day work. This allows you to hire compliantly without incorporating a Spanish subsidiary.
: Hiring through an Employer of Record is significantly faster than setting up a legal entity. In most cases, employees can be onboarded within a few weeks, depending on the role, contract terms, and completion of required documentation.
: Employment contracts in Spain must be in writing if they last longer than four weeks. Contracts are generally presumed to be indefinite unless clearly defined as fixed‑term. When hiring through an EOR, the provider prepares a locally compliant contract that reflects Spanish labor law and applicable collective agreements.
: A PEO or EOR can support contractor engagement, but Spain has strict rules around worker classification. If a contractor operates under conditions similar to an employee, there is a risk of misclassification. Many companies choose an EOR employment model instead to reduce legal and financial risk.
: Payroll in Spain is typically processed monthly. It includes gross salary calculation, income tax withholding, employee social security contributions, and employer contributions. When hiring through an EOR, the provider runs payroll on your behalf and ensures all statutory payments are made correctly.
: Employees in Spain are usually paid on a monthly basis. Some collective agreements require additional payments, such as 13th or 14th-month salaries, which are common in Spain. An EOR ensures the payroll structure aligns with local requirements.
: Yes, a PEO or EOR manages income tax withholdings and both employee and employer social security contributions. This includes calculating amounts owed, submitting filings, and making payments to the relevant authorities.
: Yes, payroll in Spain is run in euros (EUR). Employees are paid locally in EUR, while the EOR can invoice your company in an agreed currency, depending on your commercial arrangement.
: Yes, using an Employer of Record is legal in Spain when structured correctly. The EOR must act as the formal employer, comply with labor law, and meet all registration and reporting obligations. Reputable EOR providers operate fully within Spanish legal frameworks.
: All Spanish labor laws apply, regardless of whether the hiring company is foreign or local. This includes rules on contracts, working hours, termination, severance, paid leave, and social security. An EOR ensures these laws are applied correctly from day one.
: Misclassification can lead to back payments of social security contributions, fines, penalties, and potential claims from workers. Spain is particularly strict on employment status. Using an EOR reduces this risk by placing the employee in a compliant employment structure.
: A PEO or EOR ensures compliance by:

Issuing legally compliant employment contracts

Registering employees with social security and employment authorities

Applying correct tax and contribution rates

Monitoring labor law changes and collective agreements

Managing termination and severance processes correctly

This significantly reduces legal and operational risk for foreign employers.

Hire Employees in Spain with an Employer of Record

Hiring employees in Spain when using an EOR does not require setting up a local legal entity.

With EuroDev’s Employer of Record (EOR) and PEO services in Spain, you can legally employ staff, run payroll, and stay fully compliant with Spanish labor law, while EuroDev acts as the local employer.

We manage:

Spanish employment contracts
Payroll and tax administration
Social security contributions
Ongoing HR and labor law compliance

Talk to our EOR experts today

Hiring Employees in Spain with an Employer of Record

An Employer of Record (EOR) allows your company to hire employees in Spain without establishing your own Spanish subsidiary or branch. EuroDev becomes the legal employer, while your company retains day-to-day operational direction.

How hiring in Spain through EuroDev works

1. Employee selection

You select the candidate you want to hire in Spain.

2. Employment contract setup

EuroDev drafts and issues a locally compliant Spanish employment contract that complies with labor law and applicable collective bargaining agreements (CBAs).

3. Payroll & tax administration

We run monthly payroll, calculate income tax and social security contributions, and ensure accurate reporting to Spanish authorities.

4. Ongoing compliance & HR support

EuroDev manages employment administration, statutory benefits, paid leave, and compliance throughout the employment lifecycle.

Employer of Record vs Setting Up a Legal Entity in Spain

When an EOR is the right choice:

You want to hire quickly without long setup times
You are testing the Spanish market
You plan to hire a small or distributed team
You want to minimize legal and compliance risk

When a local entity makes sense:

You are building a large, long-term workforce in Spain
You require a permanent commercial presence
You want full internal control over payroll and HR administration

Key differences at a glance

	Employer of Record	Local Entity
Setup time	Weeks	Several months
Legal responsibility	EuroDev	Your Company
Payroll & Compliance	Managed by EuroDev	In-house
Upfront costs	Low	High
Risk exposure	Reduced	Full exposure

Employment Contracts Through a Spanish EOR

Permanent (Indefinite) Employment Contracts

Indefinite contracts are the standard and most widely used employment arrangement in Spain. They are designed to provide permanent stability for employees and are strongly encouraged by Spanish labor regulations.

Key characteristics of permanent contracts:

No predefined end date
Full statutory employment rights from day one
Strong protection against unfair dismissal
Mandatory notice periods apply upon termination
Employees are entitled to statutory severance in cases of objective or unfair dismissal
Can be full‑time or part‑time
Probation periods are permitted, within legal limits defined by role and applicable collective agreement

Because Spanish law assumes employment to be indefinite by default, incorrectly structured temporary contracts may be automatically reclassified as permanent.

Fixed‑Term Contract Rules (Temporary Contracts)

Fixed‑term contracts may only be used where there is a genuine and justified temporary need, such as project‑based work or employee replacement.

Key limitations include:

A maximum of two consecutive fixed‑term contracts
Maximum total duration of 24 months within a 30‑month period
Continued employment beyond this limit results in automatic conversion to an indefinite contract
Misuse of fixed‑term contracts can lead to legal penalties and mandatory reclassification

When hiring employees in Spain through an Employer of Record (EOR), all employment contracts must comply with Spanish labor law.

Termination, Notice Periods & Severance in Spain

Spain has strong employee protection laws. Employment “at will” does not apply when hiring through an EOR in Spain.

Probation Periods

Probation periods in Spain allow employers to assess an employee’s suitability for the role. They are not mandatory but must be agreed in writing in the employment contract. Where no collective agreement applies, probation may last up to six months for qualified technical employees and two months for other employees. During probation, either party may terminate the employment without notice or severance, provided the termination is lawful.

Notice periods

Minimum statutory notice period: 15 days
Notice may be extended by contract or collective agreement
Payment instead of notice is permitted
No notice is required in cases of gross misconduct

Severance pay

Standard severance: 20 days’ salary per year of service
Maximum: 12 months’ salary
No severance is owed for valid disciplinary dismissals

EuroDev guides you through termination procedures to ensure compliance and risk mitigation.

Payroll, Employer Costs & Working Hours in Spain

Payroll costs when hiring through an EOR in Spain

When hiring employees in Spain through EuroDev’s Employer of Record service, employer costs are typically around 29.90% on top of gross salary.

This covers all mandatory employer charges and statutory contributions.

Example:

Average annual gross salary: €28,294.56
Estimated total employment cost: €36,782.93

EuroDev fully manages all payroll calculations, filings, and statutory payments.

Social Security & Employer Contributions in Spain

When hiring employees in Spain through an Employer of Record, EuroDev manages all social security registrations, filings, and payments as part of the payroll process.

Employer responsibilities handled by EuroDev

Registering employees with Social Security and the Public Employment Service
Monthly payroll and contribution reporting
Withholding employee contributions
Paying employer social security contributions

Typical employer contribution structure

Social Security: 23.60%
Salary Guarantee Fund (FOGASA): 0.20–0.60% (commonly rounded in estimates)
Professional training: 0.60%

Total estimated employer contribution: ~30%

Working Hours & Overtime in Spain

Standard full‑time working schedule: 40 hours per week, typically 8 hours per day
Maximum legal overtime limit: 80 hours per year
Overtime rules and compensation are usually governed by collective bargaining agreements (CBAs)
Overtime may be compensated financially or with equivalent time off
Certain senior or managerial roles may be exempt from overtime provisions

EuroDev ensures working‑time rules are correctly applied based on contract type and applicable agreements.

Paid Vacation Leave & Public Holidays

Employees hired through an EOR in Spain are entitled to statutory paid leave. EuroDev ensures all leave entitlements are tracked and administered correctly.