Working Remotely from Spain for a Foreign Company: Employer Obligations

International remote work internationally is becoming increasingly common, and Spain has become a destination for many professionals who wish to work from home for foreign companies. However, this arrangement entails legal, tax, and Social Security obligations that companies must understand and manage properly to avoid contingencies. Let’s take a closer look:

Which labor regulations apply?

Even if the employment contract has been signed with a foreign company, if the work is habitually carried out from Spain, mandatory provisions of Spanish labor law necessarily apply. Key employment obligations include:

• Salary: compliance with the Spanish Minimum Interprofessional Wage (SMI) and the applicable collective bargaining agreement.
• Working hours and rest periods: respecting the maximum legal working time, breaks, weekly rest periods, annual leave, and other statutory leave.
• Fundamental rights: ensuring non-discrimination and the employee’s dignity.
• Occupational risk prevention: adapting health and safety measures to the remote work model.

To ensure compliance, it is essential to appoint a legal representative in Spain who can act as the company’s point of contact before the Labour Inspectorate and other competent authorities.

Social Security obligations

European legislation establishes that Social Security contributions must be paid in the country where the work activity is carried out (lex loci laboris). In the case of remote work from Spain:

• The company must register with the Spanish Social Security authorities and obtain a Contribution Account Code (CCC).
• It is mandatory to register the employee under the General Social Security Regime before the start of their activity.
• The company must pay monthly Social Security contributions (both employer and employee portions).

The legal representative or the company’s representative office facilitates these procedures and ensures compliance with all obligations.

Tax obligations

As a tax resident in Spain, the employee must declare their entire salary as employment income. The exemption for work performed abroad does not apply when the activity is carried out from Spanish territory.

With regard to the company:

• If there is no Permanent Establishment (PE) in Spain, the company is not required to withhold Personal Income Tax (IRPF) from the employee’s salary.
• If a PE exists, the company must pay tax on the profits attributable to it and apply IRPF withholdings through payroll.

Determining whether a PE exists depends on the nature of the remote worker’s activities and the level of control exercised over the company’s business activity.

 

I want more information

 

What is the role of a representative office?

Since the employee’s physical presence in Spain generates various obligations, many companies choose to establish this structure. A representative office is a fixed place of business of the foreign company in Spain, without separate legal personality, intended for auxiliary or preparatory activities (market research, promotion, communication).

Its advantages include:

• Appointing a legal representative in Spain.
• Having a tax address and facilitating communications with authorities.
• Managing employment and Social Security obligations directly.

A representative office cannot carry out direct commercial operations, and therefore it generally does not create additional tax obligations. However, if its activities go beyond auxiliary functions, it may be considered a Permanent Establishment, with related tax and withholding implications.

Frequently asked questions for companies

Must I apply Spanish labor law if the employee resides and works remotely from Spain?

Yes. Mandatory Spanish regulations apply, including minimum wage, working hours, rest periods, holidays, and fundamental rights.

My company does not have a registered office in Spain. How can I comply with legal obligations?

You must appoint a legal representative in Spain or establish a representative office to manage employment, tax, and Social Security obligations.

Where must I pay Social Security contributions for the employee?

Contributions must be paid to the Spanish system, regardless of the company’s registered office.

What is a representative office and what is it for?

It is a fixed establishment without separate legal personality, intended for auxiliary activities. It facilitates Social Security registration, appointment of a legal representative, and interaction with authorities, but cannot carry out sales or execute contracts.

Can a remote worker create a Permanent Establishment for the company in Spain?

Yes. If the employee carries out the company’s core activity from Spain or has the authority to regularly conclude contracts, this may trigger tax and IRPF withholding obligations.

If the company does not have a Permanent Establishment, who is responsible for the employee’s IRPF?

The employee must declare their salary and make quarterly payments using Form 130. In this case, the company does not withhold IRPF.

What are the advantages of setting up a representative office even if it is not mandatory?

Formalizing the company’s presence simplifies compliance with legal and Social Security obligations, provides legal certainty, and facilitates interaction with Spanish authorities.

How we can help

Working remotely from Spain for a foreign company involves more than managing schedules and contracts. It entails legal and tax responsibilities that, if not handled properly, may lead to penalties and risks for the company.

Our international mobility team at Adlanter helps foreign companies structure their presence in Spain, register employees, manage contributions, and ensure full regulatory compliance.