Spain, also known as the Kingdom of Spain (Reino de Espaa), is a kingdom in southwestern Europe with territory in the Atlantic and Mediterranean seas. The Iberian Peninsula is home to the majority of Spain's territory, which also includes the Canary Islands in the Atlantic Ocean, the Balearic Islands in the Mediterranean Sea, the autonomous cities of Ceuta and Melilla, and several minor overseas territories scattered along Morocco's Alboran Sea coast. The country's landmass is bound by Gibraltar to the south, the Mediterranean Sea to the south and east, France, Andorra, and the Bay of Biscay to the north, and Portugal and the Atlantic Ocean to the west.
Spain is the biggest nation in Southern Europe, the second-largest country in Western Europe and the European Union, and the fourth-largest country by size on the European continent, with an area of 505,990 km2 (195,360 sq mi). Spain is the sixth-most populated nation in Europe and the fourth-most populous country in the European Union, with a population of about 47.4 million people. Madrid is the country's capital and biggest city; other significant cities include Barcelona, Valencia, Seville, Zaragoza, Málaga, Murcia, Palma de Mallorca, Las Palmas de Gran Canaria, and Bilbao.
Around 42,000 years ago, anatomically modern humans first arrived in the Iberian Peninsula. Pre-Roman peoples such as the ancient Iberians, Celts, Celtiberians, Vascones, and Turdetani formed the earliest civilizations and peoples in modern Spanish area. Later, foreign Mediterranean peoples like the Phoenicians and ancient Greeks established coastal trade colonies, and the Carthaginians temporarily dominated a portion of the Spanish Mediterranean coast. The Roman colonization of Hispania started in 218 BCE, and with the exception of the Atlantic coast, they swiftly dominated the region of modern-day Spain. By 206 BCE, the Romans had ousted the Carthaginians from the Iberian peninsula, dividing it into two administrative provinces, Hispania Ulterior and Hispania Citerior. The Romans left an enduring legacy of language, religion, laws, and political and social structures. Hispania also gave birth to Roman rulers such as Trajan and Hadrian.
Hispania remained under Roman control until the Western Roman Empire fell apart in the fifth century, ushering in Germanic tribal confederations from Northern and Central Europe. During this time, the peninsula was governed by the Suevi, Alans, Vandals, and Visigoths, while the Byzantine Empire controlled a portion of the Mediterranean coast. By the fifth century, the Visigothic Kingdom had established itself as the dominating force on the peninsula.
The Umayyad Caliphate attacked the Visigothic Kingdom in the early eighth century, ushering in nearly 700 years of Muslim domination in Southern Iberia. During this time, Al-Andalus became a significant economic and intellectual center, with Córdoba being one of Europe's biggest and wealthiest cities. Several Christian kingdoms arose in Northern Iberia, the most notable of which were León, Castile, Aragón, Portugal, and Navarre. Over the following seven decades, these kingdoms' sporadic southerly expansion—metahistorically characterized as a reconquest, or Reconquista—culminated in 1492 with the Christian seizing of the peninsula's last Muslim republic, the Nasrid Kingdom of Granada. That same year, Christopher Columbus set sail for the New World on behalf of the Catholic Monarchs, whose dynastic union of the Crowns of Castile and Aragon is often seen as the emergence of Spain as a single nation. Jews and Muslims were compelled to convert to Catholicism or face expulsion from Castile and Aragon. The Inquisition was entrusted with ensuring religious orthodoxy among converts. Following the Spanish colonization of the Americas, the Crown amassed a vast foreign empire, which fueled the formation of a worldwide commerce system fueled mostly by silver produced in the New World.
Spain is a developed nation with a secular parliamentary democracy and a constitutional monarchy led by King Felipe VI. It has a high-income and advanced economy, with the world's fourteenth-largest nominal GDP and sixteenth-largest PPP. Spain has one of the world's highest life expectancies, with 83.5 years in 2019. It ranks especially high in healthcare quality, with its healthcare system regarded as one of the most efficient in the world. It is a global leader in organ transplantation and donation. Spain is a member of the United Nations (UN), the European Union (EU), the Eurozone, the Council of Europe (CoE), the Organization of Ibero-American States (OEI), the Union for the Mediterranean, NATO, the Organization for Economic Co-operation and Development (OECD), the Organization for Security and Cooperation in Europe (OSCE), the World Trade Organization (WTO), and numerous other international organizations.
Spanish art, music, literature, and food have had a global impact, especially in Western Europe and the Americas. Spain boasts the world's fourth-most World Heritage Sites (49) and is the world's second-most visited nation, reflecting its vast cultural riches. With about 570 million Hispanophones, Spanish is the world's second-most spoken native language.
At least 30 days of paid time off are required. Employees are guaranteed at least one and a half days of undisturbed relaxation each week. Sunday must, in general, be included.
The number of public holidays in Spain varies by province.
The maximum length of sick leave is 12 months (365 days), which may be extended for an additional six months (180 days). The sick leave is referred to as Temporary Disability – IT (Incapacidad Temporal). Eligible workers are eligible to benefit payments ranging from no statutory payment provision to 75% of the regulatory base while on leave.
Employees must have made at least 180 days of contributions in the five years prior to taking sick leave to be eligible for benefits. There is no minimum qualifying duration if the sick leave is connected to an accident. Employees must also have a medical certificate issued by a doctor affiliated with the Public Health System.
Maternity leave is granted to mothers for a period of 16 weeks. The leave can start up to four weeks before the projected due date, and it must last at least six weeks after the child is born.
During maternity leave, the employee is paid a maternity benefit rather than their wage. The maternity benefit is computed and provided by social security based on the previous month's contribution (including monthly income and the proportional share of the extra pay).
The monthly maternity benefit is restricted at 4,070 EUR. The employer can choose to pay the difference if the employee's wage is normally more than this amount; however, this is not required.
Paternity leave is paid for 16 weeks for fathers. The first six weeks must be taken as soon as the infant is born. In the case of multiple deliveries, leave might be extended by two weeks. The state pays for the entire 16-week period.
Employees have the right to take up to three years off to care for their children, whether they are biological, adopted, or being fostered permanently or as part of a pre-adoption program. Female employees have the right to take one hour off every day to nurse a child under the age of nine months. This may be broken down into two half-hour segments.
Beginning January 1, 2020, leave will be increased to 16 weeks, with the first six weeks being uninterrupted. Neither parent has the ability to transmit this right to the other.
Adoption Leave: 6 weeks compulsory and uninterrupted leave for both partners. 16 unpaid weeks in total can be shared between both parents. A maximum of 10 weeks can be taken by one with the remaining 6 weeks being taken by the partner.
Marriage: 15 calendar days
Serious illness or injury of family member: 2 days (4 days if travel is required).
Bereavement: 2 days (4 days if travel is required) for the death of a family member.
Moving: 1 day for moving to a new house.
The employer's and employee's rights and obligations in connection with the termination of the employment relationship primarily depend on the form of termination and the provisions of the individual or collective agreement. Employment contracts may be terminated mutually, at the end of the contract period (if it is a fixed-term temporary contract), by the employee, or by the employer for objective, economic, or disciplinary grounds. Individual and collective bargaining agreements may stipulate the circumstances under which an employment relationship will cease.
Fixed-term contracts terminate when the parties agree on an expiration date or when the service is completed. Employees are entitled to compensation of 12 days' wages per year worked at the end of a fixed-term contract. If the temporary contract is longer than one year in duration, the party canceling the contract must give at least 15 days notice.
Employees can end their employment relationship by quitting, either freely or involuntarily, or by abandoning their job, or by being fired for cause. When an employee is let go for cause, he or she is entitled to compensation equal to 33 days of salary for each year of service plus "finiquito."
Employers may remove an employee for any of the objective grounds specified in the Workers' Statute, including employee incompetence, failure to adapt, collective dismissal, or absences from work. Employers must present an employee with a termination letter that details the reason for the employee's dismissal and the date of the employee's final day of employment. Employees are entitled to 15 days' notice and compensation, often known as indemnification. Compensation is 20 days' salary each year of service, up to a maximum of 12 months, at the moment notice is given. Employers may also grant compensation in place of notice.
Employers have the authority to discipline an employee up to and including dismissal for a variety of reasons, including repeated unexcused absences, disobedience, physical or verbal abuse directed at the employer or a coworker, or sexual harassment. The dismissal must occur within 60 days of the employer being aware of the conduct and within six months of the incident. In this case, no remuneration is required, and the employee is not entitled to notice of termination. However, if the employee is a union member, the employer is required to notify the union.
Employers are required to provide 15 days' notice, and if notice is not provided, payment in lieu of notice shall be made.
The probationary period varies depending on the Collective Agreement in place at the company. The common practice is two months, but graduate technicians are usually probed for a 6 month period.
Employers should compensate employees with 20 days of salary per year of service, up to a maximum of 12 months. If a judge rules that the dismissal was unjust (i.e., without cause), the employer may reinstate the employee or make a statutory severance payment. Employees who are laid off are entitled to a legal severance payment and written notice of the contract's termination in advance. Severance pay is not payable to an employee who is terminated for disciplinary reasons.
In Spain, working hours are generally determined by individual or collective bargaining, but cannot exceed 40 hours per week on average over a year. In the absence of an agreement specifying how irregular work hours will be scheduled, the employer may allocate a maximum of 10% of working hours throughout the year. Working hours are generally limited to nine hours per day, unless otherwise agreed upon collectively or individually.
Collective bargaining agreements typically cover overtime policies. Overtime hours should not exceed 80 hours per year, as specified by law.
Overtime can be compensated by paying a higher rate than the employee's salary or by substituting an equivalent paid rest period for the hours worked.
For full-time workers, the monthly minimum salary is 950.00 EUR, or 7.04 EUR per hour.
Social security taxes are used to finance health insurance. An employer may offer supplemental health insurance to an employee as a perk. Most executives seek additional health and life insurance, and a small firm may provide a stipend in place of obtaining insurance.
Employees are given 15 days (including weekends) to marry, 2 days to mourn the loss of a family member, and 1 day to relocate.
In Spain, the overall corporate income tax rate is 25%. Other tax rates may apply based on the kind of corporation taxed and the nature of its operation. Resident corporations are taxed on their global earnings.
Non-resident income tax (NRIT) is levied at a 25% rate on revenue that may be assigned to a foreign company's permanent establishment (PE) in Spain.
After deducting the legal allowances, reductions, and deductions from the gross income, the taxpayer must apply the rate to determine the actual tax.
The income tax has been modified and simplified as of January 1, 2015. It is essential to remember that these rates differ by location. The tariffs listed here are for the Comunidad de Madrid. The regional income tax in Andalusia and Catalonia is greater than in Madrid. In Andalusia and Catalonia, the highest rate of income tax is 49 percent.
For a taxable income from €0 to €12,450, the tax rate is set at 19%.
For a taxable income from €12,450 to €20,200, the tax rate is set at 24%.
For a taxable income from €20,200 to €35,200, the tax rate is set at 30%.
For a taxable income from €35,200 to €60,000, the tax rate is set at 37%.
For a taxable income beyond €60,000, the tax rate is set at 45%.
Spanish VAT is levied on supply of goods and services made inside Spanish VAT area, as well as imports and intra-EU purchases of products and services. There are three distinct rates for various kinds of products and services, which are as follows:
Ordinary rate of 21%, applied on regular supplies of goods and services.
Reduced rate of 10%, applied on basic necessities (e.g. food and agricultural products not included in the ‘super reduced’ 4% rate, dwellings, other qualifying services). Live cultural events and cinema tickets are taxed at the reduced rate of 10% too.
Super reduced rate of 4%, applied on basic necessities other than those classified under the reduced rate (e.g. bread, milk, books, medicine).
Instead of VAT, the Canary Islands levy a separate tax known as the Canary Island General Indirect Tax (IGIC). The standard IGIC rate is 7%, while the other IGIC rates are 0%, 3%, 9.5 percent, and 15%. (20 percent for tobacco). IGIC is similar to VAT, however there are several key distinctions, such as the tax exemption for telecommunications services. This tax is levied on tangible items imported into the Canary Islands.
Sales tax is used instead of VAT in Ceuta and Melilla.
Foreigners with a Work Visa may enter, remain, and work in Spain. An employee must apply in person for a work visa, and applications must be filed at least 90 days before departure.
Employers must apply for a work visa from the Ministry of Labour prior to appointing a candidate for a highly skilled position or if the candidate is a non-EU citizen. After the Ministry of Labour has accepted the application, the Embassy or Consulate will issue the work and residence visa.
Seasonal employees in Spain have a separate Work Visa, although the process for acquiring a visa is the same. Seasonal employees, on the other hand, must demonstrate that they have planned for housing, that their travel expenses are covered, and that they will return to their home country once the task is over.
Employment contracts in Spain may be verbal or written and are deemed to exist when work is done for an employer, at the direction of the employer, by a person who is subordinate to the employer, and remuneration is exchanged for the work. At any moment throughout the work relationship, any party to an employment contract might ask the agreement to be codified in writing.
Employers must give workers with written information on the major elements of the contract and the performance of work if the employment relationship lasts more than four weeks. If there is a formal written employment contract, this requirement is met. The following items must be included in the written contract or statement:
Employer and employee identities
Start and end dates (if applicable)
Where the employee will do his or her task
The job's category and/or description
Salary information such as basic salary, bonuses, and any other monthly payments
Working days and hours
Details on vacations, including length and when they are/can be taken
The duration of notice necessary to end the contract
The appropriate collective bargaining agreement
Details about any work to be done in another country
Employees on short-term contracts have the same rights as those on long-term contracts. Employers are required to notify temporary workers about employment openings inside the organization. Changes to the employment contract are permissible. Any modifications must be communicated in writing by the employer within one month of their implementation. In most cases, the employee must concur, and both parties must sign the revised agreement.
All employment contracts made with workers must be reported to the State Public Employment Service (SEPE), Servicio Pblico de Empleo Estatal, within 10 days.
There is no set length for assignments. This is usually indicated in the employment contract for fixed-term employments.
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Setting up a subsidiary in Spain begins with deciding what kind of organization you want to create. There are four major kinds of enterprises in Spain, each with advantages and disadvantages. To determine which is appropriate for you, consider your company operations, registration procedures, minimum capital needs, and degree of commitment to the nation.
The four business possibilities are as follows:
(a) Joint venture
(b) Branch office
(c) Representative office
(d) Corporation
A Sociedad de responsabilidad limitada (S.L.), which is equivalent to a private limited liability corporation, is the most prevalent subsidiary structure. The second form of corporation is a Sociedad Anónima (S.A.), which is the Spanish counterpart of a public limited liability company. An S.L. has more organizational flexibility and requires less money than a S.A.
Spain offers three distinct incorporation procedures, depending on the option you select:
1. Ordinary regime: This regime applies to both a limited liability company and a corporation.
2. Simplified regime: Only applicable to limited liability firms that fulfill specified shareholder, share capital, and management body criteria.
3. Super simplified regime: Only applicable to limited liability firms that fulfill specified shareholder, share capital, and bylaws criteria.
The processes for each regime are identical, and the process for establishing a subsidiary involves the following:
A. Obtain Mercantile Register certification for your planned company's name.
B. Request a Provisional Tax Identification Number (N.I.F.)
C. Establish a bank account in Spain
D. Administer a statement against money laundering and terrorist funding.
E. Sign a public deed in front of a Notary Public and register your business at the Commercial Registry.
F. Obtain a firm N.I.F. after your business has been registered and established.
G. Complete any further notification processes.
If you intend to incorporate your Spanish subsidiary as a S.L., you must meet a number of conditions. Spain subsidiary regulations mandate a minimum investment capital of 3,000 EUR, which must be paid in full at the time of incorporation. The shares of a S.L. are not readily transferable, and the corporation is not permitted to issue bonds.
In terms of management, your S.L. requires a minimum of three directors and a maximum of twelve. There are no nationality or residence restrictions under Spanish subsidiary law. However, the government has stringent accounting and auditing requirements. All businesses must submit yearly financial statements with the Mercantile Register, however some may file shortened financial statements if they meet specific criteria.
