Social Security cost in Spain represents, in the best scenario, around one-third of the gross annual salary of the employee. About 85 % of the Social Security payable in Spain is at the employer’s expense. In this article we explain how social security contributions are calculated.
The contribution’s base is the annual salary divided by twelve, that is, the monthly salary of the employee, either in money or in kind. Non regular payments ( year-end bonus, Christmas pay…) should be taken into account and added to the standard monthly salary.
On the contrary, payments to the employee not representing direct compensation for the work rendered are not included in the contributions base. The most common items of this nature are indemnities, per diem allowances, sickness pay etc.
A very important feature of Spanish Social Security Contributions is that the base to calculate the contribution is floored and capped. Thus, regardless the employee’s salary, the contributions base must be comprised between EUR 1166,7 and EUR 4495,5 per month (updated at January 1st, 2023). Therefore, even if an employee earns less than EUR 1166,7 per month, the payments to the social Security would be calculated on that figure. Likewise, if an employee earns more that EUR 4495,5 per month, the base to calculate his social security contributions should be limited to EUR 4495,5
The rate applicable to the contributions base is as high as 38,45 % for standard employees. From this amount employers pay 32 % and employees pay the remaining 6.45 %. The employer is also obliged to pay a premium to the Accident Insurance Fund . The premium varies depending on the type of job and increases in accordance with the risk involved. Currently the maximum premium , applicable for example to miners and bricklayers is 6,7 % of the contribution base and the minimum premium is 1 %, applicable to clerks and other office workers.
The employer shall pay the social security contributions within 30 days following the end of the month to which they refer ( social security contributions of February must be paid before March 31). The employee share of the contribution is deducted by the employer from his monthly payroll.
Social Security contributions are due even during high risk pregnancy, maternity leave and illness , although in these circumstances the employee is not working and, accordingly, not being paid. In these circumstances the worker’s contribution is the same than the one of the last month worked before these circumstances occurred. It should be also noted that during illness the employer, together with the social security contribution, must face a compulsory sickness pay. This sickness pay is only due when the illness or injury is motivated by a non professional cause and only last for fifteen days – from the 4th day of illness to the 20 th because the first three days are not paid. The daily sickness pay amounts 60 % of the employee’s average daily salary.
From time to time certain allowances are given to promote the employment of aged workers (over 45), women, disabled or job-seekeers. Normally, this kind of incentives require that the employment contract is indefinite, that the contract is in force for a set period of time (one year or more) and that the average workforce of the company is not reduced during a certain period.
You might find useful our social security calculator to determine the cost of Social Security in Spain.
Please kindly refer to the brochure issued by the Social Security service, updated at January 2018, detailing all social security allowances in force at the time of this writing
At Tax Partners we have been providing payroll services in Spain since 1996. Please do not hesitate to contact us
