PEO & EOR in Spain - Hire in 48h Without an Entity | INS Global

PEO in Spain

Hire Globally, Pay Locally, Expand Effortlessly

At INS Global, we act as your local provider for all your consulting and Human Resources needs. By implementing our customizable PEO (Professional Employer Organization) services in Spain, our experts can be used to help you hire employees and start your foreign operations quickly. You can get to work, all while cutting through the usual red tape and limiting costs associated with global expansion.  

Our PEO service, otherwise known as a global EOR (Employer of Record), works in Spain as your local partner and assists you as you expand into a new market. Our PEO allows your business to outsource its HR services when entering the Spanish market without the need to create a distinct legal entity.  

PEOs are the perfect way to provide your company with multiple advantages to increase your competitive edge and limit your risks. Our PEO works to legally employ your staff, manage payroll in Spain, and handle employee benefits packages. Our numerous services will save your company money, limit wasted time, and avoid complications from misinterpreting local regulations.  

PEO in Spain - Summary

How a PEO Benefits Your Global Expansion

Expert Legal Advice

A PEO can offer proficiency in local regulations and accurate best practices for local administrative procedures that keep your company in constant legal compliance.

Reduced Time for Market Entry

Estimated time for Company Incorporation in Spain: 4-12 months  

Estimated time to establish a PEO in Spain: 5 days  

Increased Focus on Expansion

A PEO will provide payroll outsourcing in Spain alongside recruitment and compliance management services. When your company isnt spending valuable time on these issues, you can focus on growth. 

Simple Market Entry & Lower Costs

When entering into a new market, like Spain, simple HR mistakes might lead to a disproportionate occurrence of fees and fines that slow your business down. A PEO will reduce these risks, decrease market entry time, and save money.  

One Point of Contact

Everything your business could need can be provided by one point of contact. This decreases risks and gives you personalized, custom solutions. 

The Best Market Entry Strategy: PEO or Company Incorporation?

Incorporating your company in Spain can be an excessively complex, risky, and time-consuming process. It often requires a deep understanding of local regulations and the rules for establishing a physical entity within the country. Our PEO in Spain will allow you to operate your business without going through numerous confusing steps required to incorporate a new legal entity.  

A PEO:
  • Saves time 
  • Saves money 
  • Limits potential bureaucratic or legal pitfalls 
  • Utilizes local networks and expertise
testimonial from Manuel Ramos

Testimonial

Manuel Ramos

TERAO ASIA

Managing Director

We think INS Global is a good solution about starting in a market like China. Understanding the market doesn’t mean you need to set up a company immediately. 

5/5

Starting a PEO Agreement in Spain

INS Global’s PEO can manage employee recruitment and assignment needs in Spain in 4 steps:

  1. We speak with you to create an in-depth strategy to match your company needs
  2. Our PEO specialists in Spain provide a high level of legal expertise, which you can use to establish yourself and begin operations smoothly
  3. Our experts handle all the legal aspects of recruiting and employing your staff so that you can focus on more critical elements of business 
  4. Your employees will be able to continue focusing on their daily operations in Spain while we manage HR services and payroll 

Which to Choose, EOR or PEO in Spain?

Once youve decided to expand into the Spanish market, choosing between  PEO and Employer of Record services can seem confusing. Its necessary to understand their unique differences so that you can be fully informed and make the best decision for your company.

  • A PEO is a separate business that outsources HR services to employees working at other companies. 

  • These outsourced services can include payroll outsourcing, tax filings, and consulting on legal regulation compliance.

  • An EOR is a separate business that acts similarly to a PEO, but it will also maintain legal liability for hiring employees on behalf of other companies.

  • With a PEO agreement, the employment contract between your company and the employee remains. 

  • With an EOR agreement, the employment contract is directed by your company but legally made between the EOR and your employee. 

INS Global provides both PEO and EOR services in Spain to meet your demand. Contact us today to learn more about which service might be best for you.  

Labor Law in Spain

Employment Contracts Spain

In general, Spanish Labor Legislation allows for the freedom of form whenever creating a new employment contract. Contracts may be made verbally or in writing. However, either party reserves the right to demand an agreement in writing.  

Employment contracts are presumed to be for an indefinite duration. However, there are a limited amount of definite-term employment arrangements in Spain. Once the employee has worked past the original term of a temporary agreement, the relationship will be considered indefinite. The employee will then be entitled to standard severance upon termination.  

Working Hours/Public Holidays in Spain

For companies willing to enter the Spanish market and begin operations, understanding the generally applicable labor laws on working hours and public holidays is advantageous.  

The maximum legal working hours per day in Spain is 9 hours, to a total of 40 hours per week. The calculation of these working hours is an average calculated annually, which means that the working hours may be distributed irregularly throughout the year as long as this is stated in the employment contract and the employee still receives rest periods.

Employees are entitled to a paid annual leave of at least 30 days per year. Additionally, all employees are entitled to 14 paid public holidays every year. 

The official public holidays recognized throughout all of Spain are:

  • 1st of January – New Years Day  
  • 1st of May – Labor Day 
  • 12th of October – National Day 
  • 6th of December – Constitution Day 
  • 19th of April – Good Friday 
  • 15th of August – Assumption Day 
  • 1st of November – All Saint’s Day 
  • 25th of December – Christmas Day 

 

In addition to these national public holidays, there are an additional 4 public holidays that vary according to different regions in the country. Finally, each municipality in Spain determines 2 local public holidays.  

Sick Leave in Spain

Employees in Spain can be eligible for up to a full year of paid sick leave via social insurance. This leave can even be extended to 18 months under special circumstances.

Once they receive proof of incapacity from a doctor, the employer is responsible for paying for the initial period of sick leave allowance. After that, all costs are paid by social security. In these cases, it is the responsibility of the employer to apply for leave allowance on behalf of the employee.  

Sick leave allowance is calculated as: 

  • Days 1-3: No required pay 
  • Days 4-20: The employer pays 60% standard salary 
  • Days 21+: Social Security pays 75% standard salary   

Maternity/Paternity Leave in Spain

As of 2021, parental leave is now 16 weeks for both parents paid for through Social Security. 

6 weeks of parental leave must be taken immediately following the birth, and the remaining 10 weeks can be taken at any time during the first 12 months.  

Tax Law in Spain

CIT

The general corporate income tax (CIT) in Spain is 25%. Other taxes may be applicable, depending on the type of company and the type of business. Resident companies in Spain are taxed on their worldwide income. For PEs (Permanent Establishments) in Spain of foreign companies, NRIT (non-resident income tax) will be chargeable on any income allocated to the PE at a rate of 25%.  

Individual/Employer Social Contribution Rates

In Spain, both employee and employer must make contributions to Spain’s social insurances alongside paying taxes. 

 These contributions are Social Security (for health-related issues), Unemployment Insurance, and Professional Training.  

The following table details the rates of social contributions required for certain businesses operating in Spain:

 

Employer Rate 

Wages Rate 

Total 

Social security: health 

23.60% 

4.70% 

28.30% 

Unemployment insurance 

5.50% 

1.55% 

7.05% 

Guarantee fund for employees 

0.20% 

 

0.20% 

Vocational training 

0.60% 

0.10% 

0.70% 

Total 

29.90% 

6.35% 

36.25% 

Occupational accident 

Variable (between 0.90 and 7.30%) 

 

 

Income Tax

Personal income is taxed progressively using the following brackets:

  • 19% for the first EUR 6,000 of taxable income. 
  • 21% for EUR 6,000 to EUR 50,000 of taxable income. 
  • 23% EUR 50,000 to EUR 200,000 of taxable income. 
  • 26% for any amounts over EUR 200,000. 

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FAQs

No, it is necessary to use a local entity abroad to comply with each country labor law.

Foreign companies can either set up a local entity in each country or use the services a local PEO (Professional Employment Organization) to hire the staff on-site directly.

The employer of record is the legal entity liable for the staff employed in a specific country. In practice, a foreign company can either open a subsidiary to become the employer of record of its abroad employees or use a PEO to act as the employer of record.

Liabilities may vary from country to country and include all the staff management responsibilities: labor contract issues, payroll management, and tax compliance, social security management, expenses claim declaration, hiring and termination
procedures, etc.

In general, 1-month is necessary to have an employee based out abroad using an existing PEO as the employe of record. When incorporating a new subsidiary to be the employer of record, the delay varies from 4-12 months.