Payroll services Spain: outsourced, accurate, and fully compliant

Why Spanish payroll is different — and why it matters

Spain’s payroll compliance environment is among the most technically demanding in Europe. Unlike countries with a unified national payroll system, Spanish employers must simultaneously manage two separate government platforms — Sistema RED/Siltra for Social Security and the AEAT portal for income tax withholdings — with mandatory filings on different deadlines, different data formats, and different penalty regimes.

The stakes are immediate: a single day’s delay in Social Security contributions triggers an automatic 10–20% surcharge with no warning and no grace period. A Siltra file with a format error blocks the contribution filing until corrected. A miscalculated IRPF withholding creates a liability that accumulates across every payslip until discovered.

For foreign companies managing a Spanish team, this complexity is compounded by three factors: the system is conducted exclusively in Spanish; the applicable collective agreement (not the minimum wage) sets binding salary floors; and each employee’s situation — resident, non-resident, expatriate, seconded — requires a different calculation approach.

What Spanish payroll outsourcing covers

Monthly payroll cycle

Every month follows the same regulated cadence:

By the 23rd: Incident submission deadline. BMC receives your monthly changes — new hires, leavers, salary changes, overtime, sick leave, commissions, and holiday. Where there are no changes, payroll runs automatically on the previous month’s data.

By the 27th: BMC delivers digitally signed payslips for each employee, the SEPA bank payment file (XML ISO 20022) ready for upload to your bank, and a monthly summary report with total payroll cost, Social Security contributions, and IRPF withholdings.

By the last day of the following month: Social Security contributions (TC/FLA filings) submitted via Siltra and paid. BMC manages the submission and sends you confirmation.

By the 20th of April, July, October, January: IRPF withholding return (Modelo 111) filed with the AEAT covering the previous quarter’s withholdings.

Sistema RED and Siltra management

BMC acts as your authorised RED Agent (Autorizado RED). This means all your Social Security filings — employee registrations (AFI alta), deregistrations (AFI baja), data changes, sick leave and maternity/paternity certificates, and monthly contribution settlements — are managed by BMC through its Sistema RED authorisation.

Without an authorised RED agent, companies must apply for their own Sistema RED access, install and maintain Siltra software, and submit files directly — a burden that requires ongoing training as the TGSS updates the Siltra specification each year.

Collective agreement compliance

Spain’s 3,000+ collective agreements are not optional. The applicable convenio colectivo — at sector, provincial, or company level — sets binding minimum salaries, working hours, overtime rates, seniority increments, and paid leave entitlements that take precedence over the general minimum wage. Getting this wrong creates either underpayment (unlawful, subject to Labour Inspectorate sanction) or overpayment (unnecessary cost).

BMC identifies the applicable collective agreement during onboarding, monitors agreement renewals as new salary tables are published, and applies the correct rates for every employee category.

IRPF withholding management

Every payslip requires a correctly calculated IRPF (income tax) withholding. The withholding rate depends on each employee’s annual gross salary, tax situation (children, disability, mortgage deduction), residency status, and whether the salary includes irregular income components.

BMC calculates each employee’s withholding individually and files Modelo 111 quarterly (or monthly for larger employers). The annual summary (Modelo 190) is delivered to each employee by 31 January for their personal income tax return.

Payroll for foreign companies entering Spain

First hire triggers immediate compliance obligations

When your company’s first Spanish employee starts work, four compliance streams activate simultaneously:

1. TGSS employer registration: The company must have a Código de Cuenta de Cotización (CCC) before the first employee’s registration can be filed. If the company was incorporated without employees, this registration may not yet exist.

2. AFI alta (employee registration): Must be filed via Sistema RED before the employee’s first working day — not the day of, not the day after. A retroactive registration is automatically a late registration.

3. Collective agreement identification: The applicable convenio colectivo must be identified and the employee’s salary verified against its minimum tables before the contract is signed.

4. IRPF withholding setup: The employee’s initial withholding rate must be calculated from the data in their comunicación de datos al pagador (the form employees submit at the start of employment).

BMC manages all four streams as part of its onboarding service, typically completing setup within 48 hours for straightforward single-employee engagements.

Seconded and expatriate employees

Seconded employees and expatriates require payroll calculations that go beyond standard resident employee treatment:

Social Security system: Does the employee pay Social Security in Spain, in their home country, or in both (if no Totalisation Agreement applies)? EU citizens covered by EU Regulation 883/2004 and citizens of countries with bilateral Totalisation Agreements (US, UK, Japan, Canada, Australia, Brazil, and others) may remain in their home-country Social Security system if the secondment is temporary. An A1 certificate (EU) or Certificate of Coverage (non-EU treaty countries) documents this.

Beckham Law: Qualifying new Spanish tax residents — typically employees relocated to Spain by a foreign employer — may apply for the Beckham Law flat 24% IRPF rate (vs the standard progressive scale reaching 47%). The application (Modelo 149) must be filed within 180 days of first Social Security registration. BMC identifies qualifying employees at onboarding and manages the application.

Split payroll: Where an employee works partly in Spain and partly abroad, salary must be split between jurisdictions with each portion subject to the withholding rules of the relevant country. BMC coordinates with home-country payroll teams on split payroll structures.

Cost of payroll outsourcing in Spain

BMC charges a flat per-employee monthly fee with volume discounts. Standard fee range: €15–€45 per employee per month, depending on:

• Number of employees (volume discount applies from 10+ employees)
• Complexity (expatriate payroll, multiple collective agreements, variable compensation structures)
• Whether the engagement includes expatriate payroll advisory

There are no per-filing fees, no revision fees, and no overtime charges for incidents received before the 23rd deadline. Setup/onboarding is charged separately as a one-time fee. BMC provides a fixed-price written quote before any work begins.

Why BMC for Spanish payroll services

BMC’s payroll team includes payroll specialists, employment lawyers, and tax advisers who work together on each client’s payroll. The combination matters: when a collective agreement renewal changes salary tables, the employment law team identifies the change and the payroll team applies it immediately. When an employee’s tax situation changes, the tax team recalculates the withholding and the payroll team implements it in the same month.

For companies beginning their Spanish operations, payroll outsourcing from BMC is available from day one — before the first hire, configured during the company formation process, so the first employee’s payslip is processed correctly from their first working day.

For background on setting up a company in Spain or entering the Spanish market as a foreign company, see our dedicated guides.