Employers, employees, and self-employed professionals residing and/or performing their duties in Spain must be registered with, and make contributions to, the Spanish Social Security system.
The primary obligation for companies that will employ workers in Spain is to request their registration with the General Treasury of Social Security. It is a quick process and, if you have a digital certificate, it can be submitted in its entirety through the electronic office.
Companies are also obligated to communicate, within the periods established for this purpose, the registrations, cancellations, and changes in workers’ data who are going to start working for them or who cease to do so. A registration in the system can be processed up until the same day of incorporation and a withdrawal or a modification can be communicated up to three working days after the fact.
It should be noted that, although both the employer and the worker are required to contribute, it is the employer's responsibility to correctly calculate and retain payments for both parties. Moreover, it is explicitly prohibited for the employee to assume the employer’s social security contributions.
How do I calculate the contribution base and what are the actual business costs?
The contribution base is the gross monthly salary, taking into account the maximum- (€4,070.10) and the minimum-capped bases. If there is any overtime, it must be included, extra payments prorated (the amounts which will be received later by the employee) and paid, if any.
Of these, transportation costs and allowances paid to employees can be excluded if they are duly justified, since they are not considered remuneration.
To the resulting amount, the percentages established by the General State Budget are applied (you can find below year 2021’s rates).
As can be seen, the part of the contributions that the company must pay represents an additional cost on top of the gross salary of the employee.
Labor obligations of companies in Spain: practical case
In order to determine the total cost of an employee, we need to consider their annual salary plus the social security contributions from both the employer and the employee.
Let’s analyze the case of an assistant, without a university degree and with an annual gross salary of €16,800 and, accordingly, a contribution base of €1,400/month. (Because the €1,400 per month falls within the maximum and minimum capped bases for assistants. However, we need to remember that, if the role were an Engineer or university graduate, the minimum base to apply would be €1,466.40 in that case).
To the gross salary of €1,400/month that constitutes the base, we must add:
- 23.60% common contingencies: €330
- 5.5% general unemployment rate: €77
- 0.20% Salary Guarantee Fund: €2.80
- 0.70% for vocational training: €9.80
If we add up all the amounts, we find that the real cost for the company will be €1,819.60 per month.
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