Employees in Spain? Keep your registration in mind!
Do you have a company, and are you going to hire employees in Spain? If those employees live and work in Spain, they will probably have to pay payroll tax and social security contributions in Spain. It does not matter which nationality the employees are. However, if employees are coming to Spain for only a short period, they will continue to pay wage tax and social security contributions in their country of origin.

If you have employees in Spain, as an employer you will need to have a registration in Spain. Depending on the specific situation, this can be a permanent or non-fixed establishment. A permanent establishment can be, for example, a Sociedad Limitada. A non-fixed establishment is an entity that is linked and dependent on the parent company. Recently, the regulations regarding this and the Spanish tax authorities’ criteria have been tightened, so you easily end up with a permanent establishment. Either way, an employer registration in Spain will have to take place when there are employees in Spain. Certain tax obligations will also arise in Spain.

It is important to regulate this properly, preferably before the employees are hired in Spain. Registering the employer in Spain at a later stage (when the employees are already working in Spain for the parent company) can result in problems. These can be resolved, but it creates a long and expensive process. This is because a late registration causes a regularization to be made for the previous period, when the employees were already working in Spain, but the employer had not yet registered. This means that social security contributions and wage tax in Spain must still be paid for the previous period, with retroactive effect, and pay slips must be prepared. This can all be managed as well, but as you might expect from a bureaucratic country like Spain, you will have to pay certain increases and fines. And it can take a long time to get all this sorted out. But here, certain fines may well be avoidable by doing this regularization on a voluntary basis. So, if you already have employees in Spain and do not yet register as an employer in Spain, it is better to regularize the situation voluntarily, rather than wait for the Spanish authorities to act themselves.

The team of OTIS Legal Group is happy to advise you on these matters, and help you settle your situation properly, or resolve it adequately! Contact us easily!

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