Guide to Contracting in Spain

With Brexit and IR35 already making their mark, UK contractors are increasingly considering assignments overseas. Temporary workforces looking to Spain will find sunnier climates, better work/life balance and economic opportunities, especially in certain sectors – and a great deal more.

Generate’s payroll and contractor management experts share everything you need to start a contracting role in Spain in 2021.

Guide to Contracting in Spain

1. Visas & Work Permits

Following the UK’s departure from the EU, any British citizen wanting to work in Spain after January 2021 must now apply for a work visa, as must citizens of non-EU countries. EU, EEA and Swiss citizens have the right to live and work in Spain without a visa or permit, however any individual wanting to live and work in Spain for more than three months must register as a resident, which involves proof of the ability to support yourself financially and proof of healthcare insurance. 

Non-EU citizens moving to Spain can apply for different types of work visas depending on their length and type of employment. Those working in Shortage Occupations including Medicine, IT, Engineering, Sales, Management and Shipping can be classified as ‘highly-skilled’ and can enjoy faster visa processing and approval.

Self-employed contractors must apply for a work visa at a Spanish consulate or embassy. The work visas are valid for one year but can be renewed if all conditions are still met at the end of the year. Contractors must provide the following documentation:

2. Pay & Tax

Residents in Spain are generally subject to Spanish Personal Income Tax (PIT) on their worldwide income, regardless of where it is generated. This is taxed at progressive rates:

Non-residents – those working in Spain for fewer than three months or maintaining status as non-residents for other purposes – are subject to Non-Residents’ Income Tax (NRIT) only on their Spanish-source income.

Tax experts at PwC state, “Regarding NRIT, income not obtained through a permanent establishment (PE) is taxed on each individual total or partial accrual of income subject to tax. Losses cannot be offset against gains. Taxable income for non-residents without a PE is generally the gross income stipulated in Spanish PIT law, and no reductions are applicable. In the case of provisions of services, technical assistance, installation and assembly work resulting from engineering contracts, taxable income is the difference between gross income and the expenses generated by staff, or for the procurement of materials incorporated in the works and supplies.”

The cost of living in Spain is lower than in many other European countries. Most cities offer comfortable apartments for reasonable prices, allowing individuals and families to live closer to work and schools and minimising travel commutes. Most residents can afford meals out several times a week and small luxuries on a regular basis, and food, transport and utilities are all much cheaper than European counterparts.

Healthcare is free to all residents, and can be accessed by anyone employed or self-employed in the country by registering upon arrival. Once registered, basic state services are free, other than some or all costs towards additional items such as prescriptions. Those working or self-employed are entitled to the same state healthcare as Spanish citizens, and your dependents will also be entitled to the same level of healthcare.

3. Finding a Job

Although like most countries around the world, the Spanish economy suffered during the Covid-19 pandemic, the nation’s economy is set to make Europe’s biggest comeback in 2021 and 2022. In February 2021, the European Commission’s Winter 2021 Forecast raised Spain’s gross domestic product (GDP) growth prospects for this year to 5.6% – three-tenths of a point higher than previously expected – which when accounting for millions of people and billions of Euros, makes a monumental difference.

Economy Commissioner Paolo Gentiloni states, “Because the recession in 2020 was not as deep as expected, and thanks to the breakthroughs regarding vaccines, we now project the economy will return to its pre-crisis GDP level already in 2022.” Spain-based companies across industries are poised to capitalise on the fast-emerging South American markets in the coming decade.

Spain has one of the largest and fastest-growing IT and Software Engineering markets in Europe. The country is a major hub for tech start-ups and has seen record investment in the past five years.  The Spanish IT market is expected to be worth $26.3billion by the end of 2021, including IT equipment, software and IT services. Despite the number of IT professionals in Spain growing by 67% in the past decade, the country suffers a significant lack of tech talent to meet demand, and IT skills are on the official Shortage Occupation List – meaning expat IT contractors will be met with a wealth of employment choices.

Those interested in finding a new job have a variety of recruitment agencies and online channels to choose from. The most popular Spanish job boards include:

4. Best Reasons to Work and Live in Spain

Thinking of Working Overseas?

Generate’s contractor management and payroll specialists have experience in over 90 countries around the world. Whether you’re interested in contracting in Europe, Africa, the Americas or Asia-Pacific, find out how our expert support team could help you start your international journey.

Looking for something more challenging? Read our Guide to Contracting in Australia.