Frequently asked questions about Employer of Record in Spain

Are you looking to expand your business in Spain and don’t know where to start? Do you want to avoid the high costs associated with opening a branch in a foreign country? Have you heard about the services of an Employer of Record Spain?

If you can´t stop asking yourself the same question, please keep on reading.

In this article, we will explain to you what an Employer of Record (EOR) is in Spain, as well as all the advantages it can offer your Company.

What is an Employer of Record (EOR) in Spain?

You have probably wondered at some point what an Employer of Record is and what services this type of Company offers.

Thus, we could define this concept as ‘legal employer‘.

It is the solution that allows a Company seeking to expand its business in Spain to have its employees in our country while complying with all labor, tax, and social security obligations involved in this process.

What are the functions of an EOR Partner in Spain?

The functions performed by an EOR (Employer of Record) can vary immensely depending on the contracted service and the needs of the hiring Company.

Generally, the functions of an EOR Spain usually include:

Hiring and onboarding of the employee in the Spanish Social Security

The Employer of Record is responsible for hiring the employee and registering them for Social Security, along with paying their corresponding social fees.

Taxes and payroll management

Your EOR partner, in addition to managing the employee’s payroll, will also be responsible for paying salaries and any other compensation. They will always comply with all tax obligations, such as paying Personal Income Tax (IRPF) or Value Added Tax (VAT).

Legal and tax compliance advice

New Tandem will provide constant advice and support to ensure that all labor obligations are met.

Do I need an Employer of Record?

There are many reasons why a Company may decide to partner with an EOR service provider.

For example, to avoid the work and high costs of establishing a separate legal entity in a foreign country or simply to explore new markets before committing long-term.

Other reasons include the ease of hiring workers abroad that we offer, as well as simplifying payroll and tax management mentioned earlier.

Companies can therefore gain significant benefits from these services without needing to establish a subsidiary or branch in a foreign country. This is especially useful for businesses that lack experience in hiring workers abroad or prefer to avoid facing the challenges and costs that would entail doing so independently.

What are the benefits of hiring an Employer of Record?

Time and resource savings

Avoiding the costs associated with creating a new entity in another country will result in significant savings (both tangible and intangible) for your Company.

Reduction of legislative risk

By outsourcing your business to an EOR service provider, you will reduce the risk of legal non-compliance while staying up-to-date with tax and labor regulations.

Decrease in administrative burden

Your Employer of Record partner will help reduce the time and effort you dedicate to administrative tasks (such as payroll or tax compliance), taking on much of those responsibilities on your behalf.

Access to new markets

An EOR service provider has established entities in those countries where you want to expand your Company. This will give you greater flexibility when testing new markets and quickly hiring employees.

International professional representation

The lack of knowledge on how to navigate such a competitive market, combined with the existing cultural differences, are some of the most relevant obstacles when expanding your business abroad.

However, NEW TANDEM as your Employer of Record will let you have access to a team of local experts who understand Spanish Laws and requirements at your disposal.

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Which companies can use EOR?

As a general rule, EOR Providers are usually needed by those companies which are accustomed to hiring remote profiles.

Thus, EOR services are very common for startups or businesses looking to enter the market quickly with less risk than opening a legal entity in another country would entail.

Additionally, it is important to emphasize that an Employer of Record has minimal requirements regarding client size. The only condition is that they do not have a legal entity in the country where the employee is located.

How does an Employer of Record work?

Imagine you are part of an international Company (with 50/60 employees), but you wish to return to Spain and work remotely without losing your job. After evaluating the proposal, your Company agrees to send you back to Spain for indefinite remote work.

While organizing your relocation and analyzing current regulations, your Company’s first thought is about the need of headquarters in Spain; however, this cost is too HIGH for them. Once this option is ruled out, they consider contacting and collaborating with an Employer of Record.

That specific Employer of Record hires you and takes care of your payroll, allowing your Company to fulfill all legal responsibilities in Spain while keeping you among their ranks.

Regarding contract conditions when drafting it, everything related to salary, bonuses, hours worked, etc., will be agreed upon between your Company and yourself but NOT with the Employer of Record. Your relationship with the EOR service provider should be minimal beyond receiving payment for your payroll; so you will continue organizing work with your Company as before.

Finally, the Employer of Record will also handle paying your social contributions (as well as any other related management) to Spanish Social Security. For this service provided by the EOR partner, they will charge your Company a fee.

What can New Tandem do for you as your EOR Partner in Spain?

New Tandem, a PIONEER in EOR Services in Spain.

We have over 25 years of experience in the HR sector, and being pioneers in EOR services throughout Spain, our track record and commitment to innovation speak for themselves.

We are the ideal Local Partner for companies looking to establish their businesses in Spain, allowing them to forget all the obstacles and challenges that this process entails.

When setting up a local structure in a foreign country, it is important to consider the high costs that this may involve. As well as the complexities of the labor legislation.

And this is where NEW TANDEM can help you…