Spanish Payroll What well cover: Facts about Spain Spanish - - PowerPoint PPT Presentation
Tax Year 1 st January to 31 st December An overview of Spanish Payroll What well cover: Facts about Spain Spanish business culture Employer obligations Rights and responsibilities Reporting Employment law
Tax Year 1st January to 31st December
For reference all examples are based on:
hos de Madrid)
stipulated, if the employer has agreed a higher salary this will be captured in a V
12 months. This is the method we have used as is accepted common practice
Single person, earning €60, 000 pa and has a company car, value €28000, compa ny pension scheme ‐ employee contribution 5% and employer contribution 8 %. Works standard 40 hr week We will look at how gross pay, tax, social security, pension and net pay are calculated
Annual Gross salary 60.000€ / 12 months = 5.000,00€ per month Base salary as per CBA = 1.207,28€ 2 extra pays to be prorated 5.000€ / 12 = 416.66€ x 2 = 833,34€ Voluntary Improvement = 5.000,00€ ‐ 1.207,28€ ‐ 833,34€ = 2.959,38€ Employer Pension Plan Contribution = 8% on 5.000,00€ per month = 400,00€ Employee Pension Plan Contribution Deduct = 5% on 5.000,00€ per month = 250,007€ Company car = The calculation of the company car would be: 20% x €28000 x 40% personal use / 12 months : 28.000,00€*20%= 5.600,00€ *40%= 2.240,00€ / 12 = 186,67€ monthly BIK amount Benefit in kind deductions = 400,00€ ER PP + 186,67€ Company Car = 586,67€ EE Social Security deductions = All earnings are niable however there is a social security ceiling taxable base of 3.642,00€ for 2016 on which a 6.35% is niable for the employee. In this scena rio, even though the employee has higher income, is capped. ER Social Security deductions = 31.25% of the niable taxable income IRPF (PAYE deductions) = All earnings are taxable and a 25,56% is applicable for this salary
Gross to net:
Tax rate check with the Tax Office:
Married person, spouse earning, salary is €40, 000 pa, company pension scheme ‐ emp loyee contribution 5% and employer contribution 8%. Works standard 40 hr week We will look at how gross pay, tax, social security, pension and net pay are calculated
Annual Gross salary 40.000€ / 12 months = 3.333,33€ per month Base salary as per CBA = 1.207,28€ 2 extra pays to be prorated 3.333,33€ / 12 = 277,77€ x 2 = 555,56€ Voluntary Improvement = 3.333,33€ ‐ 1.207,28€ ‐ 555,56€ = 1.570,49€ Employer Pension Plan Contribution = 8% on 3.333,33€ per month = 266,67€ Employee Pension Plan Contribution Deduct = 5% on 3.333,33€ per month = 166,67€ Benefit in kind deductions = 266,67€ € ER PP EE Social Security deductions = All earnings are niable on 6.35% for the employee. ER Social Security deductions = 31.25% of the niable taxable income IRPF (PAYE deductions) = All earnings are taxable and a 19,23% is applicable for this s alary
Gross to net:
Tax rate check with the Tax Office:
Types Basic overview New Spanish Company Similar to the LTD in UK, must have a minimum paid up capital of 3.000 Euros Subsidiary New Spanish entity formed to be a direct subsidiary of the holding overseas company with trading/business activities in Spain: must have a minimum paid up capital of 3.000 Euros Branch Overseas company registers a branch with the same legal identity as its holding company at Registro Mercantil International Payroll Overseas company with only marketing activities in Spain, (no operating or trading activities) Permanent Establishment (P.E) Overseas company with activities in Spain, (operating or trading activities)
Common for all company structures
Rights Obligations
Company
borrowing
requirements
interests
Fiscal representative
the company
Branch Subsidiary
share
company
company’s liability
3,000.00
to the amount
Some of the basic requirements are: – Opening of bank account and deposit of the initial share capital – Decide on the method of administration, management and percentage participation of shareholders – Obtain a NIE number for all individual shareholders and directors, and a CIF for corporate shareholders – Decide on where the registered office will be – Decide on the company objects / activities – All shareholders and directors have to be present at the setting up meeting with the Notary, or represented by way of a power of attorney – Approve the standard draft of Articles of Association produced by the Notary and execution of the public deed of incorporation before the said Spanish Notary Public Similar to the LTD in UK, must have a minimum paid up capital of 3.000 Euros
Details/ Legal Documents
Trade Register Office) in Madrid
Public and duly sealed with the Apostille of the Hague Convention
Some of the basic requirements are:
shareholders
shareholders
by way of a power of attorney
execution of the public deed of incorporation before the said Spanish Notary Public
A new Spanish entity formed to be a direct subsidiary of the holding overseas company with trading/business activities in Spain:
legalized by Notary Public and duly sealed with the Apostille of the Hague Convention.
Tax Office.
Notary Public and duly sealed with the Apostille of the Hague Convention.
Companies’ Register Certificate of the relative incorporation of the Holding company legalized by Notary Public and duly sealed with the Apostille of the Hague Convention.
Tax Office.
Some of the basic requirements are:
execution of the public deed of incorporation before the said Spanish Notary Public
Tax Office
Details/ Legal Documents
by Notary Public and duly sealed with the Apostille of the Hague Convention
taxation treaty
.
Details/ Legal Documents
Companies’ Register Certificate of the relative incorporation of the Holding company legalized by Notary Public and duly sealed with the Apostille of the Hague Convention.
into Spanish by a sworn translator)
Details / Legal Documents
to the Tax Office
must appoint a resident manager / fiscal representative
Some of the basic requirements are:
legalized by Notary Public and duly sealed with the Apostille of the Hague Convention
dealings with the Spanish Tax Office and Social Security Office legalized by Notary Public and duly sealed with the Apostille of the Hague Convention.
Public and duly sealed with the Apostille of the Hague Convention.
Register Certificate of the relative incorporation of the Holding company legalized by Notary Public and duly sealed with the Apostille of the Hague Convention. Overseas company with only marketing activities in Spain, (no operating or trading activities). Also known as Non Resident Entity Without A Permanent Establishment
Details/ Legal Documents
– Good Standing Certificate issued by the Department of Taxation of the relevant US State. – Certificate of Status (so called “Capacidad de obrar”) issued by the relevant Spanish Consulate
code (so called “IAE” – Impuesto de Actividades Económicas)
Some of the basic requirements are:
legalized by Notary Public and duly sealed with the Apostille of the Hague Convention
with the Spanish Tax Office and Social Security Office legalized by Notary Public and duly sealed with the Apostille of the Hague Convention.
duly sealed with the Apostille of the Hague Convention.
Certificate of the relative incorporation of the Holding company legalized by Notary Public and duly sealed with the Apostille of the Hague Convention. .
Overseas company with activities in Spain, (operating or trading activities).
Details/ Legal Documents
– Certificate of Status (so called “Capacidad de obrar”) issued by the relevant Spanish Consulate
code (so called “IAE”)