Guide to understand Spanish paychecks

Once you start working in Spain and receive your first paycheck, you might not be able to understand everything on the paycheck. You might wonder how to interpret the paycheck to understand why you received less than what you expected. Here in this article, we will try to explain the usual terms that appear in a paycheck for you.

1. What is a Spanish payroll?

2. What are the elements of a Spanish payroll?

1. What is a Spanish payroll?

Depending on where you come from, you may or may not have received a payroll before. A Payroll is an official document:

• that reflects the monetary amount a worker receives as compensation for his or her services
• that shows the amount the company paid to social security.

In most cases, the payrolls are issued on a monthly basis, once a month is a normal frequency a worker receives their salary. It is crucial, both for the workers and the company, to understand the different parts of the payroll.

The paycheck and payment details are regulated by the current Spanish worker status law and General Law on Social Security. Also, there are institutions like Ministry of Labor and Social Economy. Nowadays, most Spanish companies have replaced paper payroll with electronic payroll, a PDF version of the same document to make the whole process easier and faster. Don’t worry! It has exactly the same legal validity as the paper one.

2. What are the elements of a Spanish payroll?

The payroll is a long document that can occupy a whole page. The document usually consists of the following information:

• Company’s identification data
  • Name of the company
  • Address of the company (registered office)
  • The CIF number of the company (identification number for tax purposes)
  • Social security contribution code of the company
•  Data of the worker that receives the payroll
  • Full name of the worker
  • NIE number
  • Seniority in the company
  • Worker’s social security number
  • The professional category or group
  • Code referring to the type of existing contract
• Issuance/settlement date
• Compensation/Remuneration: how is the worker paid in terms of different payment concepts? Gross salary is the sum of the total remuneration. This part of the payroll is divided into two types of remuneration:
  • Wage compensation: These are the concepts for which the worker receives his/her salary, and they should contribute to social security.   
    • Base salary: This is the main amount, also the amount agreed in the employment contract or by collective agreements according to the worker’s position.
    • Salary supplements: extra bonus the employee receives as a result of experience, special knowledge, seniority in the firm, dangerous or hard-working conditions, extra hours, the salary in kind (the part of salary received in the form of goods or services, such as accommodation), incentives (usually performance-related)
  • Non-wage compensation: benefits, compensations, or substitutions that neither contribute to social security nor can be deducted from personal income tax. These goods or services may represent a maximum of 30% of the total payroll. For example, if a worker travels daily by public transport and they have agreed that this expense, the company should return to him at the end of the month. This amount/bonus to be received would be non-wage remuneration.
• Deductions: As already mentioned above, we should deduct personal income tax and social security contributions from the gross salary to arrive at the net amount.
  • Income tax: The income tax amount will vary according to the worker’s position in a company, his or her income level, and other demographic data such as marital status or age.
  • Social security contributions: Another part of the salary that should be deducted and contributed to the social security to create a “fund” for possible negative situations. This is the money used for unemployment benefits, maternity/paternity leave, medical leave, training, etc. The minimum social security contribution rate can be calculated by the following:
    • Common contingency rate: about 4.7% of the salary
    • Deductions for unemployment: equivalent to 1.55% in general contracts
    • Vocational training: 0.1% of the general contracts
• The real amount of money got by the worker: To get the final amount of the money you get in your bank account, you need to subtract from your gross salary the deductions of social security and the income tax payment.

Here in Adeslas, we know about the confusion and worries of most expats. And paychecks are one of the many important issues concerning most expats. We want to ensure you the best benefits by protecting you with our medical insurance, the best expat insurance that meets all visa/ NIE requirements as well as reliable health insurance that can relieve you from any physical or mental discomfort.

If you would like to know more about this topic, check out one of the blogs listed below:

• How to apply for the student NIE/TIE in Spain for the first time?
• Guide to the use of online banks in Spain
• Guide on how to open a bank account in Spain
• Payroll in Spain: what you need to know as an entrepreneur

Reference:

[1] "BOE.Es - BOE-A-2015-11430 Real Decreto Legislativo 2/2015, De 23 De Octubre, Por El Que Se Aprueba El Texto Refundido De La Ley Del Estatuto De Los Trabajadores.". Boe.Es, 2021, https://www.boe.es/buscar/act.php?id=BOE-A-2015-11430&p=20190312&tn=1#a26. Accessed 7 Sept 2021.

[2] "BOE.Es - BOE-A-2015-11724 Real Decreto Legislativo 8/2015, De 30 De Octubre, Por El Que Se Aprueba El Texto Refundido De La Ley General De La Seguridad Social.". Boe.Es, 2021, https://www.boe.es/diario_boe/txt.php?id=BOE-A-2015-11724.  Accessed 7 Sept 2021.

Our content will be updated according to the most recent legislation. Last update: 17/07/2023