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
Seguridad Social http://www.empleo.gob.es/index.htm
are paid is TGSS http://www.seg-Social.es/Internet_1/index.htm
http://www.sepe.es
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145 form is used to advise the Tax Office of any changes in the employee’s situation that will potentially affect their income tax rate 145 form should be completed and submitted:
employee’s personal situation changes (i.e. became a parent, divorce, additional income, etc.)
employees); before the first working day
new hires
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SECTION 1: Employee personal details as name, tax number, marital status, descendants, disability SECTION 2: Employee’s descendants details
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SECTION 3: Employee’s ascendants details SECTION 4: Additional existing benefits and pensions (including anyone living with employee)
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SECTION 5: Employee current house mortgage details which tax deduction applies (prior Jan 1st 2013) 145 form is filled and signed by the employee who hands it to the employer, who then signs and stamps the form. The employer submits the form online to the Tax Office as part
One copy is kept by the employee and another copy is kept by the employer records for tax inspection purposes
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Personal income tax in Spain is called IRPF (Impuesto sobre la Renta de las Personas Físicas) Dual system: National tax - a progressive tax throughout the Spanish territory Regional tax - tax rates could vary based on the region the employee lives and works Each regional Tax Office approves their own regional tax rates, basic and top income taxable amounts and tax rates applicable
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2016 income tax rates (*) Regional rate column shown are non-residents tax rate. Those will be replaced by the regional tax rates applicable in each region Rates effective from 1st January 2017 have not been published - Budget for 2016 was due October From To National rate % Regional rate % Total % 12, 450 9.50 9.50 19 12, 450 20, 200 12 12 24 20, 200 25, 200 15 15 30 35, 200 60, 000 18.50 18.50 37 60, 000 + 22.50 22.50 45
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the payslip:
employee on the 145 form)
submits their tax return
the tax codes depend on whether the employee is married, if the spouse is working, debts, loans, children and so on
download the tax codes due and also submits the payments and returns
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The employer must provide all employees the Withholding Tax Certificate (Certificado de Retenciones) for the current tax year to enable employees to fill their annual Income Tax Return The Income Tax Return should be submitted to the Tax Office by the 30th June of the following year (i.e. 2015 total earnings to be submitted in 2015 income tax return by the 30th of June 2016)
Frequency - Annual Employers are expected to produce the certificate by the end of January but this can be delayed provided that employees are informed Employees will report the amounts on their annual income tax return
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The tax forms to be submitted by Payroll Withholding Tax certificate Annual summary of employee earnings and taxes 111 TAX FORM Resident – withholding taxes 216 TAX FORM Non Resident – withholding taxes 190 TAX FORM Resident – withholding tax annual summary 296 TAX FORM Non Resident – withholding tax annual summary
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111 form is a payment form to the Tax Office that companies and the self- employed complete with the total amount of withholding tax retained through the payroll, and the sales tax retained from other companies and self-employed people and freelancers (through their invoices) in the last month / quarter Frequency monthly or quarterly (depending
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Monthly deadline for submission and payment: Payment via direct debit : 15th of the following month Payment via bank transfer : 20th of the following month Quarterly deadline for submission and payment: Payment via direct debit, 15th of the following month after quarter ends: Q1 = 15th April Q2 = 15th July Q3 = 15th October Q4 = 15th January Payment via bank transfer, 20th of the following month after quarter ends : Q1 = 20th April Q2 = 20th July Q3 = 20th October Q4 = 20th January
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For non-residents the 216 form is used (modelo 216, IRNR, Impuesto sobre la Renta de no Residentes) It is a payment form showing the total amount of the withholding tax retained on behalf of non-resident employees and VAT retained from other companies and other self-employed people and freelancers who do not have a permanent establishment in Spain. It includes intercompany invoices and loans Frequency monthly or quarterly (depending of the size of the company) Same deadlines as 111 form
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190 form is an annual report to the Tax Office that summarises the 4 quarterly or 12 monthly 111 forms submitted during the current tax year It is not a payment form, just an appraisal form Frequency Annual due on the 30th January
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296 form is an annual report to the Tax Office that summarizes the 4 quarterly 0r 12 monthly 216 forms submitted during the current tax year for non-residents It is not a payment form, just an appraisal form Frequency Annual 30th January
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The world is becoming increasingly interconnected as a result of massively increased trade and cultural exchange. The biggest companies are multinational corporations which relocate their employees to their subsidiaries abroad The Spanish Government have launched a series of measures to promote the inward flow of expatriate workers, which could be very beneficial for employers and employees. Those benefits include private medical insurance, attractive pension plan, meal vouchers, international schools and nurseries and property searches together with a favourable tax plan and the advantage of being relocated to the Spanish sun!
24%
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The law is aimed at all foreign workers moving to the Spanish territory who apply to became liable for a special taxation based on their income in Spain for the next 5 tax years after being relocated to the country Flat rate tax of 24% on their income in Spain up to an annual income of 600,000€ Above 600,000€ the tax rate is 45% from 2016
Real Decreto 35/2006
Known as the "Beckham Law" gained its nickname after the footballer David Beckham became one of the first foreigners to take advantage of it after joining Real Madrid football club
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Requirements In order to apply for this Regime, the following conditions must be met:
10 years; and
assignment
EU/EEA residents. The amended rules will also apply to individuals who relocated to Spain before 1 January 2015
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Forms – general info 149 form Request to the Tax Office to apply (or resign) for the special taxation of non-residents relocated to Spain. It must be submitted within 6 months upon arrival. Tax Office will reply in the next 15 days. Once the application is granted the special tax rate will apply for a period of 5 years. Individuals must fill and submit 150 form (Annual income tax). Until the special tax regime is granted, individuals must fill and submit 210 form (Annual income tax) instead.
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reported to the Social Security Trust Fund (TGSS - Tesorería General de la Seguridad Social) on monthly basis
contribution group the employee is under
The above rates might vary for part time employee, apprentice, etc. Rates effective from Jan 122 CONTRIBUTION RATES (%) Employer Employee TOTAL Basic 23.60 4.70 28.30 Overtime 23.60 4.70 28.30 Overtime (emergency reasons) 12.00 2.00 14.00
Payment and allowances that should not be included in the calculation of contributions Travel Mileage allowance - up to 0.19 € / km Parking tickets and tolls - no limit Hotel accommodation - up to 53.34 € per night Daily travelling - up to 26.67 € per day Severance pay Any excess above the statutory unfair dismissal MUST be included Compensation for relocations / deaths / suspensions Any excess above the amount stated in the CBA must be included
Payment and allowances that should be included to calculate monthly contributions Any additional Company compensation and benefits in kind This includes various types of non-wage compensation provided to employees in addition to their normal salaries Exceptions:
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Employer and employee monthly contributions are paid one month in arrears The monthly payment file is called TC1 Deadlines:
month
Any additional payments such as the summer bonus will require an additional payment file
Once the TC1 is reported and the monthly contributions are paid to the authorities then by 5th of the following month, the TGSS produce the TC2 The TC2 is sent to the company as confirmation
employee The total contribution amounts should match with the TC1 There is no annual summary for TC1 or TC2 The employer should keep both the TC1 and TC2 forms for at last 4 years
programs help the employer to keep the right people, grow profit and help employees learn specific knowledge or skills to improve performance in their current roles.
towards a training pot
learning centre, and after submitting the supporting documentation to TGSS, a discount on the monthly contribution payment will apply 128
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(EHIC). The card is valid for one year
the employer will request an additional 12 months allowance. This 24 month period could be again prolonged if there is an agreement between both countries up to 5 years
back to Spain or applying for registration in the Social security system of the adopted country It is the company’s responsibility to deal with the applications before the assignment takes place. Any delay or lack of communication means the employee will not be covered in the destination country and penalties will apply
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the EU area, are subject to the Social Security legislation in force in their adopted country. The Spanish Social Security law applies for temporary assignments
than 12 months, the employer must complete the TA–200 form
will be subject to Spanish Social Security and subsequently the employee will be exempted from contributions to the Social Security in the adopted country
the monies
– Annual Leave – Public Holidays – Sick Leave – Maternity Leave – Paternity Leave – Shared parental leave – Adoption
calendar days paid leave
employee will be notified, at least, two months before his holiday start
30 days’ entitlement may be granted after as few as 20 working days
1st January New Years Day 6th January Epiphany 14th April Good Friday 15th August Assumption of the Blessed Virgin Mary 12th October National Day 1st November All Saints' Day 8th December Feast of the Immaculate Conception 25th December Christmas Day
State sick pay (“Incapacidad Temporal” – “IT”) applies: a) From day 4 for ordinary sickness or non-work related accident b) From day 1 for sickness resulting from the work or an accident in the workplace Up to 365 days are payable which can be extended by another 180 days if the employee would be able to return to work after treatment After 18 months on state sick pay if the employee cannot return to work due to a critical or terminal illness or total permanent disability, the employee could claim a state pension The state sick pay amount could vary depending on the employee salary and role in the
Sick leave must be granted by a GP or hospital doctor A sick certificate (“Parte medico de baja / alta”) must be renewed each week until the employee is discharged
Late fee or lack of SSP communication will apply
GP provides with a weekly sick form to the employee
Weekly sick forms are immediately handed to the employer as it is a legal requirement to include state sick pay calculations in the current payroll
Employer communicates any SSP in the current month to the Social Security authority
On their own initiative or in accordance with the collective agreement, employers can top up state sick payments and claim back the state portion Employees can apply for a delegated payment where state payment will be paid directly by the employer and then deducted from the employer monthly contributions. Delegated payments will cease after 365 days when the INSS (National Institute
payment/covered in the CBA
The above applies unless the specific CBA states otherwise (*) Base Cotización (contribution base); amount of the salary that is used to calculate employee monthly Social Security contribution
Sick leave pay (caused by occupational illness or accident at work) - remember that an accident on the way to or from work is deemed to be an accident at work
From day 1
contribution base Social Security (advanced by the employer on behalf of Social Security)
(*) Base Cotización (contribution base); amount of the salary that is used to calculate employee monthly Social Security contribution
woman’s work conditions can be a risk for either her or baby, the employer should be told as soon as possible
communication to HR is recommended
future employer that she is pregnant before starting employment
and/or to breastfeed their infants
starts as it cannot be processed retrospectively Maternity leave pay = 100% of employee contribution base
To be entitled to receive maternity leave and pay an employee must meet the following criteria:
Social Security contribution in the last 7 years
contribution in the last 7 year
qualifying period is so long or nil for a woman under 21
Breast feeding is highly recognised and supported by employers:
nursing break a day until the child is 9 months old
accumulated and up to 15 working days added to the maternity leave period
years old i.e. can opt to work part time
Two type of paternity leave:
employer)
multiple births, the allowance increases two weeks per child To be entitled to receive state paternity pay the employee has to qualify i.e. has had 180 days' paid employment within the previous 7 years It is rare for the other partner to take more than the 2 weeks leave Paternity leave pay = 100% of employee contribution base
Shared Parental Leave will enable eligible mothers, fathers, partners and adopters to choose how to share time off work after their child is born or placed Limits:
addition to the paternity leave)
after the birth
Adoption rights
Additional leave
Marriage 15 days’ allowance (including weekends) Birth, death, accident or serious illness or hospitalisation of relations 2 calendar days (4 days if travel is required) Moving houses 1 day Meeting public and private obligations (jury service, appearance in court, etc.) as long as required Performing trade union or workers' representative activities: as established by law or collective agreement
In every case, the worker must inform the employer in advance and justify taking the time off work
Spanish Worker Law states that the employee annual salary is divided in 14 payments:
January to 31st December
June to 31st May Annual bonus and additional salary payments could also be paid as part of the annual salary depending of the CBA. Or these could be pro-rated and added to the monthly salary Employer and employee contributions are therefore pro-rated into the 12 monthly payments New employment contracts may have an enhanced annual salary that includes both the paga de Navidad and the paga de Verano
1/12th of the summer payment but 7/12ths of the winter payment
will have paid the maximum due based on their grade on their regular salary payment
Most common benefits:
social security
and individual. Any excess is subject to tax and social security
contributions at 5% of the employee gross salary. It is tax free up to 80,000€ a year (any excess is taxable), there is no social security liability
be provided on a monthly basis
must be paid for periods not exceeding one month
(including registration numbers)
and income tax deductions)
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Section 3 – deductions, including tax and contributions Section 1 – employer and employee details Section 2 – gross pay elements Section 4 – total amounts Section 6 – employer contribution amounts Section 5 – net pay amount Payroll calculations are based on the CBA applicable plus the additional Company benefits
Employer / Company legal name Employer / Company postal address Employer / Company (Social Security registration number - CCC) Employee name and surnames Job position range Start date Employee tax registration number
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Employee NI number Employee payroll number Department number Occupational classification Type of contract code Payroll period – if starter or leaver, days worked in the month Total number of days of the month (30 days if monthly salary, calendar days if daily salary)
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Daily units Payroll system code and name of the pay element Gross amount Rate per daily unit Deduction amounts
(*) pay elements subject to pay contributions
Salario Base Basic Salary Minimum basic salary is stated in the applicable CBA based on employee job
minimum basic salary is shown as “A CUENTA CONVENIO” Taxable, SS PP Empresa Employer pension contribution It is not mandatory, it is a benefit in kind and must be shown in payslip SS, non taxable. Up to 8000€ per year. Any excess is taxable. T comida Meal vouchers It is not mandatory, it is a benefit in kind and must be shown in payslip Limitable, non taxable up to 9€ per working
taxable. S Salud Non- taxable Private Medical Insurance It is not mandatory, it is a benefit in kind and must be shown in payslip SS, non taxable up to 500€ per individual and
taxable.
Seguro de Vida Private Life Insurance It is not mandatory, it is a benefit in kind and must be shown in payslip Taxable, SS S Salud Taxable Private Medical Insurance It is not mandatory, it is a benefit in kind and must be shown in payslip Taxable, SS S. Accidentes Accident sickness insurance Mandatory depending on the CBA Non taxable, SS
Pagas Extras Prorated extra payments 2 additional annual extra payments prorated in 12 monthly payments (in this example the employee does not get additional monthly payments in Christmas and December but prorated through the 12 monthly salary payments) Taxable, SS A cuenta convenio Above CBA minimum basic salary Any excess from the minimum CBA basic salary. It could be also called “Mejora voluntaria” Taxable, SS
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Daily units
Payroll system code and name of the pay element Gross amount
Rate per daily unit
Deduction amount
Benefits in kind It must be shown in payslip. No SS Deduction
Emp. Employer tax amount on employee benefits in kind as above Employer pays in advance the tax amount on the employee benefit in kind Advance payment
Especie Employer tax amount on employee benefits in kind as above Employer tax amount paid in advance is now deducted – it is in fact withheld and paid to the authorities directly by the employer Deduction COTIZACION CONT. COMU 4,70 Employee basic monthly contribution This is deducted from the employee
amounts and these are paid over to the authorities at the end of the month on behalf of the employee Deduction COTIZACION FORMACION 0,10 Employee Contribution to Training pot Deduction COTIZACION DESEMPLEO 1,55 Employee Contribution to Unemployment pot Deduction TRIBUTACION I.R.P.F. 21,43 Employee income tax Deduction
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Total amount Basic monthly contribution Pro rated extra payment Total taxable amount Total deductions Total gross amount Accident at work and Unemployment contribution
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Date and location To be stamped by the company Employee’s bank details Employer Total Cost Total NET PAY To be signed by the employee
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Base contribution Contribution rates (%) Total to pay
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