Employer of Record (EOR) in Spain
An EOR in Spain allows businesses to enter the market quickly and help maintain compliance with local laws, all while reducing the overhead costs of establishing a local entity. Atlas HXM offers a seamless EOR service that handles all aspects of employment from payroll processing (including Spain's unique 14-month salary system) to compliant administration.
Partner with Atlas HXM for a cost-effective, compliant solution to hire and manage your workforce in Spain.
Quick Overview of EOR in Spain
Expanding into Spain doesn't have to mean drowning in paperwork or hefty setup costs. With an Employer of Record (EOR), you can bypass the complexities of local regulations and quickly hire employees, all while maintaining compliance with Spain's labor laws. From payroll processing and tax compliance to benefits management, an EOR takes care of the legal nitty-gritty like social security contributions, so you can focus on growing your business without the need to set up a costly local entity.
The EOR model offers a low-risk, cost-effective alternative to setting up a subsidiary. Establishing a local entity in Spain can cost anywhere from USD 19,200 to USD 38,500 (EUR 15,000 to EUR 30,000) plus the cost of maintaining human resources (HR), legal assistance, accountants and more. It can also become highly administrative. By partnering with an EOR, you can avoid these setup costs and enter the market faster, avoiding the overhead of a physical office. This is especially beneficial for startups, SMEs, and businesses testing new markets, who need to act quickly and comply with complex local regulations.
How an EOR Works
Atlas HXM provides EOR services that ensure your business remains compliant with Spain's labor laws while you focus on growing your operations, free from administrative and legal burdens.
Candidate Selection
Atlas HXM does not recruit candidates, but will check the employment setup for compliance around new hires like validating right-to-work, reviewing contract terms against Spanish rules, and configuring payroll and statutory obligations correctly. EOR providers in Spain, including Atlas HXM, can assist with work permit applications and provide necessary documentation for visa processes, though employees typically must apply for visas themselves at Spanish consulates.
Employment Contracts
Atlas HXM drafts and administers employment contracts in compliance with Spanish labor laws. In the contract, we clearly outline employment terms to reduce the risk of future disputes, such as:
Job title and responsibilities
Salary, benefits, and working hours
Leave entitlements and notice periods
Payroll & Benefits Management
Payroll is processed in Euros (EUR), including:
Accurate tax withholdings and social security contributions
Statutory benefits such as medical insurance and mandatory 14-month salary payments
The EOR also helps maintain compliance with mandatory benefits, so employees are protected under Spain's laws.
Work Permit Compliance
In Spain, EOR providers can assist with work permit applications and provide necessary employment documentation for visa processes. Atlas HXM manages compliant employment, payroll, social security, and statutory obligations in alignment with Spanish labor regulations.
Ongoing HR Support
Provides HR support, including: Leave management, employee relations, and regulatory updates throughout the employee's tenure. This allows businesses to focus on core operations, while Atlas HXM handles ongoing compliance.
What to Choose: EOR vs PEO
Work Life in Spain
Spain's employment framework is designed to balance operational needs with employee protections. Here's what you need to know:
Employment Types:
Permanent: Ongoing employment with full statutory benefits and strong job security protections.
Fixed-Term: Hired for a specific project or defined duration, with specific renewal limitations.
Temporary: Short-term assignments through temporary agencies; entitled to same conditions as direct employees.
Probation Periods: Probationary periods can be up to 6 months for qualified technicians and 3 months for other employees, depending on the applicable CBA.
These periods must be agreed in writing and allow employers to assess employee suitability. The EOR ensures that all terms comply with Spanish labor laws.
Working Hours & Overtime: In Spain, the standard workweek is 40 hours (averaged annually), with a maximum of 9 hours per day. Employees must receive at least 12 hours of rest between working days. Overtime is limited to 80 hours per year and must be compensated at least at the regular rate or through equivalent rest time. The EOR ensures that all working time regulations are properly managed.
Leave Entitlements
Leave Type | Eligibility / Duration | Payment / Notes |
|---|---|---|
Annual Leave | Minimum 23 working days as per the applicable CBA | Paid by employer; cannot be substituted with money |
Maternity Leave | 16 weeks (plus 2 weeks per additional child) | Paid at 100% by social security; minimum 6 weeks post-birth |
Paternity Leave | 16 weeks | Paid at 100% by social security; first 6 weeks mandatory |
Sick Leave | Up to 12 months (extendable to 18 months) | 60% from day 4-20, 75% after day 20; paid by employer/social security |
Public Holidays | All national and regional holidays | Paid; varies by autonomous community |
Vacation Leave | 23 calendar days minimum | Paid; must be taken (cannot be carried over) |
Payroll & Benefits: Spain operates a unique 14-month salary system with mandatory summer and Christmas bonuses. Atlas HXM manages payroll in EUR, social security contributions (employer and employee), statutory benefits, and supplemental benefits like private health insurance and meal vouchers.
Atlas HXM can help you manage these aspects and can help ensure that employees are supported and compliant with Spain's labor laws while businesses can focus on operations without administrative burdens.
What to Choose: Indirect vs Direct EOR
Taxes & Compliance
Spain operates on a calendar-year tax system, running from January 1 to December 31. Employers must remit personal income tax withholdings monthly by the 20th of the following month, submit annual income tax returns between April 1 and June 30, and pay social security contributions by the last day of the following month. VAT returns are filed quarterly with specific deadlines throughout the year.
Category | Details |
|---|---|
Employer Payroll Tax | Social security contributions: 29.9% of gross salary
|
Employee Payroll Tax | Progressive income tax: 9.5%–24.5% (plus regional variations)
|
Pension System | Public pension system funded through social security
|
VAT & EOR Costs: Spain applies a 21% VAT rate on most services, including EOR services. EOR services are generally subject to VAT, either included in quoted fees or added separately. Businesses may claim VAT credits if registered and meeting requirements.
Atlas HXM handles tax compliance, including progressive income tax calculations, social security contributions, year-end filings, and coordination with regional tax variations across Spain's autonomous communities, ensuring businesses remain compliant while minimizing administrative burden.
Termination
Termination procedures in Spain are strictly regulated with specific notice periods and severance requirements. Objective dismissals require 15 days' notice, while disciplinary dismissals can be immediate. Severance pay varies: 20 days per year of service (capped at 12 months) for objective dismissals, and 33 days per year of service (capped at 24 months) for unfair dismissals. The EOR helps ensure proper handling of terminations, including documentation, notice periods, final wages, and compliance with Spanish labor courts' requirements.
Visas & Work Permits
In Spain, non-EU foreign nationals must obtain work and residence permits to be legally employed. Work permits are issued by Spanish Labor Authorities and require employer sponsorship. EOR providers, including Atlas HXM, can assist with work permit applications by providing necessary employment documentation, job descriptions, and proof of employer solvency. However, employees must apply for work visas in person at Spanish consulates. Once authorization is in place, Atlas HXM manages compliant employment, payroll, social security, and statutory obligations in alignment with Spanish regulations.
5 Things to Look for in an EOR Provider in Spain
Local expertise and knowledge of Spanish labor laws, social security contributions, and regional variations across autonomous communities.
Advanced technology for payroll processing (including 14-month salary system), reporting, and HR system integration.
Experience in your industry and handling work permit management and visa support processes.
Strong compliance track record with Spanish labor courts and relationships with government agencies and legal advisors.
Global presence to support multi-country expansion, with verified security and compliance standards (ISO 27001/27017/27018, GDPR).
Atlas HXM provides direct EOR services, managing payroll (including Spain's unique 14-month system), compliance and benefits efficiently. Atlas HXM's unified platform automates HR, payroll, and compliance tasks, while offering premium employee support, global benefits, and access to 9,000+ learning courses. Recognized by Everest Group PEAK Matrix 2025 and NelsonHall NEAT Assessment 2026, Atlas HXM combines compliance, technology, and global expertise.
FAQs
How quickly can I hire employees in Spain through an EOR?
With an EOR, you can typically hire employees in Spain within 1-2 weeks once all documentation is complete, including contract preparation and social security registration.
What are the main differences between Spanish employment contracts and other European countries?
Spain has unique features including mandatory 14-month salary payments, strong job security protections, and specific probationary period limitations.
Can remote employees work from anywhere in Spain?
Spanish remote work laws require specific agreements and must constitute at least 30% of working time over a minimum 3-month period.
How does the Spanish social security system work for international employees?
International employees working in Spain are generally subject to Spanish social security contributions and benefits, with some coordination for EU citizens.
What happens if an employee disputes their termination in Spain?
Spanish labor courts handle disputes, and employees have significant protections. Unfair dismissals may result in higher severance payments.
Are there industry-specific employment requirements in Spain?
Yes, many industries have collective bargaining agreements that set additional requirements beyond general labor law minimums.