Many of my clients often ask – how does the PEO model work in Spain, Germany, the UK, China, Timbuctoo, or any other far-flung (or sometimes closer to home) location?
Well, these are great questions and ones that I am happy to (and frequently do) answer. However, some questions are akin to asking a brain surgeon, “How do you do that?”. It is not always possible to give a quick and easy answer.
To help those companies looking to expand internationally, be they based in Europe, the USA, the Middle East or further afield, I have decided to write a series of high-level articles that will help companies understand some of the issues and challenges they may have when expanding internationally. I am going to publish one post a week, explain a little more detail about each country, the legal, HR and payroll framework and how a PEO can help.
This week I am covering Spain, for no other reason than it’s one of my favourites to do business in. Various local differences, great weather and a (relatively) simple framework to work in means I enjoy both the challenges and the culture when employing there.
What you are now lucky enough to get (if you are still reading) is a high-level overview of employing in Spain. This helps if you want to do it in-house or through an international PEO such as ourselves, PEO Worldwide. This is great information and I am giving it away for free!
To employ in Spain you will (normally) need to incorporate an entity. These come in various forms but a company is the normal route. This comes with it the standard accounting requirements, bookkeeping, payroll, sales tax, banking requirements (must be a Spanish domiciled bank to pay government taxes) and the like.
You will also have to employ people on the correct contract as this directly affects the level (and ultimately the employee’s eligibility for state benefits) of social security the employee and the company pay in their payroll tax. I’d like to say I can give you a simple overview of how much this is. I’d like to, but I can’t. Suffice to say that it is 20%(ish) dependent on job role, salary and your inside leg measurement!
The employment contract will define the role, working hours, breaks and will take into account any collective bargaining agreements that may be in place. It will also govern the minimum wage that must be paid for the specific job role.
Taxes are (usually) collected by the employer and remitted to both the Tax Office (Agencia Tributeria) and Social Security Office (Seguridad Social). The nice thing about this is both will give you a shiny certificate showing you have paid the tax. This is always something good to show your clients so they can see that the money is going where it should rather than to fund my yacht in the Bahamas (I wish!).
If you want to know a little more, please feel free to look at how we help with the link below.
If that has piqued your interest, feel free to reach out to me directly.
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Have a great day and let’s do more next week.