Summary

Spain has a comprehensive social security system which provides a range of old age, invalidity, sickness, unemployment and other social benefits, including family allowances and income guarantees. Entitlement to benefits generally derives from and individual’s contribution history, although some benefits arise due to residence in Spain.

Although the headline contribution rates of Spanish social security are high, the low level of income at which contributions are capped means that for more highly paid inbounds, paying Spanish contributions can be considerably cheaper than remaining insured under their home country scheme.

Details

Contributions

Employer contributions are 30.4% of income up to €4495 per month, and employee contributions are 6.45% of the same capped income. Maximum employer contributions are therefore around €16,400 per year, and employee contributions €3,500.

Treaties

Spain has social security agreements with all European Economic Area countries and more than 25 non EEA countries, including The US, Canada, China, Australia and most Latin American countries. These agreements determine which country has the right the levy social security contributions, has the obligation to provide benefits, and prevent social security being levied twice on the same income. Most inbounds expatriates to Spain therefore continue to pay home country social security rather than Spanish contributions.

Given the capped cost of Spanish social security and the generally good level of social welfare benefits, assignment planning to avoid the having to use the treaty provisions to remain insured at home is, while not widespread, used for some higher paid expatriates.

Exemptions

Per diem allowances to cover subsistence expenses when an individual is working outside their usual work location in Spain can be paid without tax or social security up to certain limits.

Administration

Non Spanish nationals who become liable to social security need to be registered with the Tresorería General de la Seguridad Social – TGSS. This registration should take place before hiring/arrival in Spain and can be done online. Registrations in Spain are made on a provincial basis rather than as part of a single national process. The same provincial approach applies to most aspects of social security contributions.

Benefits

The National Institute of Social Security (Instituto Nacional de la Seguridad Social- INSS) handles state-funded healthcare and welfare entitlements. the benefits system is comprehensive, and the level of benefits paid is generally good.

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