Spain Payroll Explained: IRPF, Social Security & Employer Costs

Each month the employer runs payroll and issues an itemised payslip, the nómina. It starts from the employee’s gross salary and applies two deductions: IRPF, the personal income tax, and the employee’s share of social security. What is left is the net pay that reaches the employee’s bank account.

Separately, and this is the part that surprises people, the employer pays its own social security contribution on top of the gross salary. So the true cost of a hire is the gross salary plus roughly 30.65%, not just the salary itself. The employer sends the IRPF to the Agencia Tributaria and all the social security to the Tesorería General de la Seguridad Social. If the whole model is new to you, our explainer on what an Employer of Record is sets the context.

IRPF (Impuesto sobre la Renta de las Personas Físicas) is Spain’s personal income tax. The employer withholds an estimated amount from each payslip and pays it to the Agencia Tributaria, then the employee settles up in their annual tax return. The withholding rate is personal: it depends on the salary, the type of contract, and the employee’s family circumstances.

The tax itself is progressive and is split between the state and the autonomous community where the employee lives, so the total ranges from around 19% at the bottom to 47% or more at the top, and the exact bands differ by region. For the employer, the practical points are that the withholding is reported regularly to the Agencia Tributaria (typically on form 111, with an annual summary on form 190), and that getting the withholding roughly right keeps the employee’s annual return simple.

The second deduction from gross pay is the employee’s share of social security, which is about 6.5% for a standard permanent contract in 2026. It funds healthcare, pensions, and unemployment cover, and it breaks down as roughly 4.70% for common contingencies, 1.55% for unemployment, 0.10% for vocational training, and 0.15% for the new intergenerational equity mechanism (MEI).

Higher earners also pay an additional solidarity contribution on the portion of salary above the maximum contribution base, introduced in 2025 and rising over time. For most employees, though, the 6.5% is the figure that shows up on the payslip.

This is the big one for budgeting. On top of gross salary, the employer pays a social security contribution of about 30.65% for a permanent contract in 2026, plus a variable premium for occupational accidents that depends on the type of work. The fixed part breaks down like this.

• Common contingencies: 23.60% — the largest piece, funding sickness, parental leave and pensions.
• Unemployment: 5.50% on a permanent contract (higher on fixed-term).
• FOGASA, the wage guarantee fund: 0.20%.
• Vocational training: 0.60%.
• MEI, the intergenerational equity mechanism: 0.75%.

Add the occupational accident premium, often around 1.5% for office roles, and the employer’s total is usually in the low 30s as a percentage of salary. That is why a €40,000 salary costs an employer closer to €52,000 once contributions are included. Our worked example in what it costs to employ someone in Spain takes a full salary through the numbers.

Social security is not charged on unlimited salary. It is charged on a contribution base, which sits between a floor and a ceiling. For 2026 the maximum monthly base is 5,101.20 euros and the minimum is 1,381.20 euros. If someone earns more than the maximum base, the standard contributions are calculated only up to that ceiling.

Salary above the ceiling is instead subject to the separate solidarity contribution, a smaller charge that applies only to the excess. For most roles the salary sits below the ceiling and the full percentages apply, but for senior, well-paid hires the cap materially changes the employer’s cost, which is worth modelling before you make an offer.

Spain has a distinctive pay structure. Most employees receive their annual salary across 14 payments: twelve normal monthly payslips plus two extra payments, the pagas extraordinarias, traditionally paid in summer and in December. A contract can instead prorate the salary into 12 equal payments, spreading the extras across the year, if the collective agreement allows it.

When you see a Spanish salary quoted, always check whether it is stated across 12 or 14 payments, because it changes the monthly figure. The payslip itself is a legally defined document that itemises gross pay, each deduction, the contribution base, and the net, so the employee can see exactly how their pay was calculated. For the practical registration steps behind all of this, see our step-by-step guide to hiring in Spain.