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The idea sounds wonderful: a café con leche in Málaga (or Valencia, or wherever) in the morning, a short walk on the beach at lunchtime, tapas with Spaniards in the evening – and all that with a solid foreign employment contract (and the corresponding salary) in your pocket. What could possibly go wrong?
Well, quite a lot.
Many people think: ‘I'm still employed by my German or French or Dutch or UK company, I'm just based in Spain. No one will notice!’
Spoiler: They will. Especially the tax office. And social security. And sooner or later, the Spanish authorities too.
Because: Anyone who lives and works in Spain permanently is – as a rule – considered a tax resident there. This means that Spain would like a piece of the salary pie – even if the contract was signed abroad and the employer and, if applicable, customers are based abroad.
However, if the employer is based abroad – and, in case of doubt, knows nothing about the employee's new place of work – then the employer pays the taxes in Germany or France or The Netherlands or UK, and Spain doesn't like that in the long run.
And yes, there is a double taxation agreement, but if you are permanently resident in Spain and perform your work here, Spain has the right of first taxation.
Within the EU (keyword: European Union), the following applies in principle: you are covered by social security where you work.
So if you work permanently from Spain, social security contributions must be paid here in Spain to the Seguridad Social – even if the employment contract is signed in Germany or The Netherlands or France. Again, if the foreign employer is not aware of this, they cannot take care of it.
For short-term assignments, there is the famous A1 form.
This works wonderfully for a few months of project work (up to a maximum of two years) – but of course it must also be initiated by the employer. But anyone who thinks they can use it to work under the Spanish sun for five years is mistaken.
A foreign employment contract is usually subject to foreign labour law. However, if you are actually working in Spain, mandatory Spanish regulations may still apply – for example, regarding working hours, public holiday regulations, minimum wage or protection against dismissal.
Or to give a simple example: where can you quickly obtain a certificate leave of absence for work in Spain if you are ill? This is because private doctors here do not usually issue these certificates for work – in Spain, this is the responsibility of the Centro de Salud. And when it comes to renewal, at the latest, the employer will become suspicious.
The result?
A legal patchwork quilt that makes even experienced HR departments nervously reach for their coffee.
It's not just the employee who breaks out in a sweat. The foreign employers could also face problems:
Issues such as
quickly come to mind for an employer.
If an employee works permanently in Spain, the company may be considered a ‘resident’ for tax purposes there – at least in part. For many companies, this is about as attractive as an unannounced audit on a Monday morning.
Fortunately, the story does not end tragically, but rather pragmatically.
For a few months or up to a clearly defined maximum period of two years, a clean secondment with an A1 certificate can work. Formally correct, but limited in time.
The employee receives a Spanish contract – either with a subsidiary of the employer or the employer registers with the tax office and the Seguridad Social, and a Spanish payslip is created by a (good) gestoría and taxes and social security contributions are paid in Spain. More bureaucratically complex, but legally much cleaner.
A service provider in Spain officially hires the employee and ‘loans’ them to the German company.
The employee lives legally in Spain, the German company does not have to set up its own branch – everyone is reasonably happy.
Some switch to freelancing (keyword: autónomo) and, for example, conclude a service contract with their former employer. This works well, but you are then no longer an employee with the corresponding rights, but self-employed, and the issue of possible bogus self-employment must be regulated.
The idea is tempting: a foreign salary, Spanish quality of life.
But simply packing up your laptop and saying ‘Hola home office’ does not work legally in the long term.
If you want to do it right, you need planning, tax advice and an employer who is on board. Then you can actually have both: Foreign contract security and Spanish sunsets.
