Hiring employees in Spain as a US company: what you need to know
Hiring talent in Spain can be an attractive next step for a US company expanding into Europe. But finding the right employee is only part of the process. Before making an offer, you also need to decide how you will legally employ that person in Spain.
And there is no single answer that works for every company.
Depending on your plans, you may hire through an Employer of Record, register your US company as a foreign employer in Spain, or establish your own Spanish entity. The right structure depends on how quickly you want to hire, how many employees you expect to build a team around, and what Spain means for your longer-term European strategy.
Can a US company hire employees in Spain?
Yes. A US company does not necessarily need to set up a Spanish subsidiary before employing someone in Spain.
Spanish Social Security specifically provides registration requirements for foreign companies that employ workers in Spain without establishing a workplace there. Among other requirements, a foreign company from outside the EU must provide evidence of its legal establishment and appoint a legal representative domiciled in Spain.
That means the real question is not simply “Can we hire in Spain?” but “Which employment structure makes sense for us?”
Option 1: hire through an Employer of Record in Spain
An Employer of Record, or EOR, can be useful when you want to employ talent in Spain without first building your own local employment infrastructure.
With Parakar’s EOR service, for example, the employee is legally employed through Parakar’s Spanish entity. Parakar manages areas such as the local employment contract, payroll, HR administration and employment compliance, while your company remains responsible for the employee’s day-to-day work.
This can make EOR particularly relevant when you are hiring your first employees, testing the Spanish market or want to move quickly without immediately committing to an entity.
But EOR should not automatically be the long-term answer. If Spain develops into an important market with a substantial local team and business activities, another structure may eventually be more appropriate.
Option 2: register your US company as a foreign employer
There is another route that international employers sometimes overlook: employing in Spain directly through the foreign company without incorporating a Spanish subsidiary.
In the right circumstances, a US company can register with Spanish Social Security as a foreign employer and appoint the required representative in Spain. Parakar supports this type of cross-border employment through its Non-Resident Payroll, or NRP, services.
This can create an interesting middle ground between EOR and entity setup: your company remains the direct employer, while local payroll and employment obligations still need to be managed correctly.
The suitability of the NRP will depend on the activities of the parent/main company. For its part, the representative office in Spain, as it has employees, will have the tax and employment responsibilities associated with its own activities.
Option 3: set up a company in Spain from the USA
If Spain is becoming a permanent market rather than simply a hiring location, establishing a Spanish entity may make more strategic sense.
Setting up a Spanish company involves more than registering a name. The official incorporation process includes steps such as obtaining a tax identification number, preparing the company’s articles, executing incorporation before a notary, registering with the Commercial Registry and completing tax and Social Security registrations.
For a US company planning a larger Spanish operation, building a team or opening a Madrid office, that additional infrastructure can be justified. For one or two employees, however, establishing an entity purely to create an employment vehicle may add unnecessary administration.
The decision should therefore follow the business strategy, not the other way around.
Spanish employment law: what should an American employer know?
Spanish employment law differs considerably from the employment-at-will environment familiar to many US businesses.
Employment contracts are presumed to be indefinite, while fixed-term employment is limited to specific circumstances such as production needs or replacing another employee.
Working time is also regulated. The statutory maximum for ordinary working time is currently an average of 40 hours per week calculated annually, while employees are entitled to at least 30 calendar days of paid annual leave.
Spanish employees are also entitled to two additional salary payments each year, although the applicable collective bargaining agreement may allow these to be spread across the twelve regular monthly payments.
This is where local expertise matters. The employment contract cannot be designed by simply adapting a US template: the applicable Spanish legislation and, where relevant, collective bargaining agreement need to be considered.
If the person you want to hire is not an EU, EEA or Swiss national, immigration may add another step. A US citizen moving to Spain for employment, for example, generally needs the appropriate Spanish residence and work authorization before starting work.
What does hiring an employee in Spain cost?
The employee’s gross salary is only one part of the total employment cost.
For 2026, Spain’s statutory minimum wage is €17,094 gross per year, based on €1,221 per month over 14 payments. Depending on the employee’s role and applicable collective bargaining agreement, the required or market salary can of course be higher.
Employers must also budget for Spanish Social Security contributions. In 2026, the employer contribution for common contingencies alone is 23.60% of the applicable contribution base. Further employer contributions apply for areas including unemployment, FOGASA, professional training, Intergenerational Equity Mechanism and occupational contingencies. The final payroll cost therefore depends on factors such as salary, contract and occupational classification.
Add payroll administration, benefits and the operational cost of your chosen employment structure, and it becomes important to calculate the full employment cost before agreeing a compensation package.
EOR, foreign employer registration or a Spanish entity?
The best option depends on what you are trying to achieve.
If you have found one employee and want to enter Spain quickly, an EOR may provide the flexibility you need. If you want to remain the direct employer without establishing a local company, foreign employer registration may be worth exploring. And if Spain is becoming a substantial long-term market, your own entity may provide the structure needed for the next phase.
This is why we do not believe international employment should start with a product.
At Parakar, our local specialists look at your hiring plans, timeline and longer-term ambitions first. From there, we help determine an employment structure that fits your situation and support the local HR, payroll and compliance requirements behind it.
And if Spain is only the beginning of your European expansion, you do not have to solve the same employment puzzle from scratch in every new country.
Planning to hire employees in Spain from the USA? Talk to our experts about the setup that best fits your plans.
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