How to Hire and Pay Contractors in Spain

Hiring contractors in Spain is a smart move for startups and HR teams. It gives them flexible access to talent. However, Spanish labor laws for autónomos (self-employed contractors) are unique. It’s important to follow these rules closely. Mistakes can lead to legal problems like contractor misclassification, fines, or tax issues.

In this guide, we’ll cover everything you need to hire contractors in Spain and pay them correctly. We’ll explain who qualifies as a contractor, how to engage them legally, and the tax and social security obligations. We’ll also discuss typical payment terms, the risks of misclassification, and tips for staying compliant, especially for international teams. We aim to keep it informal and straightforward, with references to Spanish regulations for support.

Who Qualifies as a Contractor (Autónomo) in Spain?

In Spain, an autónomo is a self-employed person or independent contractor. This means they work for profit on their own, offering services or products independently. They operate outside the control of any single employer. A definition from Spanish labor law states:

“El trabajador autónomo es aquel que realiza de forma habitual, directa, por cuenta propia y fuera del ámbito de organización y dirección *de otra persona, una actividad económica o profesional a título lucrativo.”*​ https://elderecho.com/trabajo-cuenta-ajena-trabajo-cuenta-propia-similitudes-diferencias

In simpler terms, contractors manage their own work: they usually set their schedules, use their tools, and work for multiple clients. Unlike employees (trabajadores por cuenta ajena), who follow a company’s contract, contractors work under a civil or commercial contract for services.

Key differences between a contractor and an employee in Spain include:

• Independence: Contractors work with a high level of autonomy. They aren’t controlled or managed like employees. For instance, a freelancer might design a website whenever they choose, while an employee designer must stick to the company’s schedule and guidelines.

• No Payroll Benefits: Contractors don’t get typical employee benefits like paid holidays, sick leave, or severance pay. They aren’t on the company’s payroll; instead, they invoice for what they do.

• Financial Risk and Tools: An autónomo usually provides their own tools or equipment and takes on the financial risks of their work. They often have to buy materials or training themselves.

• Multiple Clients: Many contractors have various clients at the same time, which supports their independent status. However, Spanish law recognises “autónomo dependiente” (TRADE), an economically dependent contractor who earns more than 75% of their income from one client. A TRADE is still a contractor but needs a special written contract with that main client (more on this later).

If someone in Spain works like an employee—such as following a company’s schedule, taking direction, and lacking real independence—calling them a “contractor” is misleading. The law may consider them an employee, even if they invoice as a freelancer. This is the well-known “falso autónomo” (false self-employed) situation that Spanish labor inspectors monitor. We will discuss the risks of misclassification and Spanish labor inspections later, but remember: only true independent workers qualify as contractors.

How to Legally Hire a Contractor in Spain

Once you’ve found a professional to act as an independent contractor (autónomo), how do you legally engage their services? Hiring a contractor in Spain differs from hiring an employee. Here are the key steps and requirements:

1. Use a proper contract for services (Contrato Mercantil): You won’t use an employment contract for a contractor. Instead, sign a civil or commercial agreement – often called a contrato de prestación de servicios or contrato mercantil. This contract outlines the work scope, deliverables, payment terms, and the independent nature of the relationship. It should state that no labor relationship (relación laboral) exists, and the contractor is responsible for their own taxes and social security. For a TRADE (economically dependent contractor), Spanish law requires a written contract and registration with the public employment service. Ensure the agreement is in writing to protect both parties, and consider a dual language (Spanish/English) version if one party doesn’t speak Spanish.

2. Verify the contractor’s registration (autónomo status): In Spain, the contractor must register with the tax authorities (Agencia Tributaria) and Social Security before starting work. As the hiring company, confirm the contractor has done this:

• Tax Agency Registration (Hacienda): The contractor must register using the Modelo 036 or 037 (tax registration forms) with the Agencia Tributaria​.

  This informs the tax office about their business activity (via an IAE code – Impuesto de Actividades Económicas category). Most freelancers use the simplified Modelo 037. This step gets them a CIF/NIF as an autónomo and enrolls them for VAT (IVA) if applicable. Tip: You might ask for a copy of their Modelo 036/037 registration or their VAT number (NIF, often their DNI with a letter).

• Social Security Enrollment (RETA): Autónomos must enroll in the Régimen Especial de Trabajadores Autónomos (RETA), the Spanish social security system for self-employed workers. This is done online via the Seguridad Social’s portal (Import@ss) and is mandatory before they start working. During enrollment, the freelancer chooses a contribution base (which affects their monthly social security fee) and selects a mutual insurance fund (mutua) that covers work accidents and illnesses. The hiring company doesn’t handle this for the contractor, but you should verify that your contractor has a Social Security number and is “alta” (active) in RETA. Contractors may show you a document confirming their social security registration.

3. Agree on the scope and terms in compliance with law: Ensure that the contractor's work is genuinely an independent project or service. Clearly define deliverables or services. If the arrangement starts resembling employment (e.g. fixed schedule at your office, using your equipment, working under close supervision), pause – you might need to hire an employee or adjust the terms. In Spain’s legal framework, the substance of the relationship matters, not just the label. Design the collaboration to be project-based or consultancy-like. The contract for services should also include clauses about confidentiality, intellectual property (who owns the work product), and termination terms, as needed.

4. Consider the Autónomo TRADE scenario: If your contractor spends most of their time on your project and earns at least 75% of their income from you, they may be classified as an Autónomo Dependiente (TRADE) under Spanish law. TRADE contractors have special status with added protections (like 18 days off per year and specific termination notice) and the contract must explicitly state they are TRADE and be registered with the authorities. This situation is rare for genuinely independent contractors, as most try to work with multiple clients. If you suspect this might apply, consult a labor lawyer or advisor to draft the contract correctly.

In summary, to hire a contractor in Spain, ensure they are a bona fide autónomo, use a solid contract, and confirm they’re properly registered. Unlike hiring employees, you do not need to register them in your payroll or with Social Security. Your relationship is business-to-business. However, you should collect invoices from them for payments (which we’ll cover next) and keep those for your bookkeeping and tax records.

(For more details on Spanish labor rules and distinctions, you can also check out our in-depth Spain hiring guide)

Tax and Social Security Obligations for Contractors and Companies

Hiring an autónomo in Spain means both the contractor and the company have tax and social security duties. The good news is that companies don’t pay employment taxes or social security for true contractors. These are the contractor’s responsibility. Still, companies may need to withhold some taxes and should grasp the overall tax situation. Let’s break it down:

For the Contractor (Autónomo): A Spanish contractor must manage their own taxes and social security payments:

• Income Tax (IRPF): The income tax (IRPF) applies to the contractor’s earnings. Freelancers usually make quarterly tax pre-payments to Hacienda or have clients withhold taxes on invoices. The standard withholding tax is 15% on professional service invoices from autónomos. This means the contractor issues an invoice to the company, including a line for a 15% IRPF deduction (if they’ve freelanced for over 2 years; new freelancers can apply a reduced 7% rate). The hiring company withholds this 15% and pays it to the tax agency on the contractor's behalf. At year-end, the contractor reports total income minus expenses in their tax return and settles any difference. Important: Foreign companies hiring Spanish contractors might not withhold Spanish taxes. In these cases, the contractor may need to handle quarterly tax payments alone. It’s wise to clarify this in your contract.

• Value Added Tax (VAT or IVA): Most contractors must charge VAT (IVA) on their services, as they operate as businesses. The standard VAT rate in Spain is 21%. An autónomo’s invoice will typically add 21% IVA to their fees, unless exempt or under a reduced rate (some professions have 10% or 0% rates). If your company is VAT-registered in Spain or the EU, you can usually deduct this as input VAT. Non-Spanish companies sometimes encounter the “reverse charge” rule, which complicates things. Contractors file quarterly VAT returns to pay the IVA collected (minus IVA paid on business expenses).

• Social Security (Monthly Autónomo Fee): Spanish contractors pay a monthly social security fee (the cuota de autónomo) to cover healthcare, retirement, and more. This fee is fixed, based on their chosen contribution base and income tier. As of 2025, Spain introduced income-based tiers for autónomo contributions. For example, a freelancer under 670€ a month might pay around 200€ monthly, while someone earning over 6,000€ could pay up to 590€. These rates adjust annually to match earnings. The contractor must pay this fee regardless of how many clients they have and typically sets up a direct debit with Seguridad Social. These payments are key costs to consider when setting rates.

• Other Taxes: Some freelancers might pay IAE (a business activity tax) if their revenue is high, but most autónomos are exempt due to income limits. They may also pay an annual self-employment tax in their region or local licenses, but these vary. The main taxes are IRPF and IVA.

For the Hiring Company: From the company’s side, hiring a contractor means fewer direct obligations than hiring an employee, but you still have crucial duties:

• Withholding and Informative Declarations: If your entity is in Spain, you generally need to withhold 15% IRPF from payments to Spanish independent professionals. You pay the contractor 85% of the invoice (plus the full VAT), and the remaining 15% goes to Hacienda on their behalf. Then, you file a quarterly withholding tax form (modelo 111) to remit those withholdings and an annual summary (modelo 190). If no invoice is provided or the contractor isn’t registered, don’t pay them as a “vendor” without clarity. Every payment for services should be documented. Avoid paying a contractor “under the table” without an invoice, as you wouldn’t be able to deduct that cost from your taxes.

• Verify VAT details: Check that the invoice from the contractor includes their VAT number (NIF) and the correct IVA. If you’re a Spanish company, you’ll log that invoice in your VAT records and can generally reclaim the IVA. If you’re a foreign company, you might not be charged IVA (e.g., if outside the EU). Confirming these details ensures both parties handle VAT right. The Spanish contractor will know their obligations, but it’s good for you to understand why some invoices have VAT and others don’t.

• No social security payments for the company: You do not pay any social security for a pure contractor. You don’t withhold social contributions from their pay since this doesn’t apply to B2B deals. The contractor pays their own RETA cuota. Ensure the person is indeed a contractor. If authorities later decide they were effectively an employee, you could be liable for unpaid employer social security contributions and fines. (We’ll cover this risk in the misclassification section.)

• Contractor’s Invoices in Accounting: Keep all contractor invoices on file. Spanish companies must retain these for at least 5 years (and practically 6 years for mercantile records). Even foreign startups should maintain these records as proof of legitimate business expenses if questioned by Spanish tax authorities about payments to individuals in Spain.

In summary, the contractor manages their own tax filings and social payments, while the company mainly handles withholding on income (if applicable) and ensures proper invoicing. This relationship is simpler than employment, which is why companies prefer to hire contractors in Spain. But this simplicity only works if the lines are clear; otherwise, liabilities can come back to the company.

(Need help managing invoices and payments to multiple contractors? Using a platform like Rivermate’s contractor management solution can simplify onboarding, payments, and compliance paperwork.)

Payment Terms and Practices for Contractors in Spain

When it comes to paying contractors in Spain, knowing the usual payment terms is key. This helps you keep a good working relationship and stay compliant with Spanish law. Spain, like many EU countries, has rules to protect freelancers and small suppliers from late payments. Here’s what you should know:

1. Standard Payment Terms – 30 Days (or 60 by agreement): By default, Spanish law says that if no payment term is stated, payment is due within 30 days of receiving the service or invoice. In B2B transactions (company to autónomo), parties can agree to a longer term, but the maximum is 60 days. This comes from Spain’s anti-morosidad legislation, which follows EU rules. Law 15/2010 (changing Law 3/2004) states that anything beyond 60 days is not enforceable, even if a big company tries to push for it. So, the norm is to set either 30-day payment or 60 days if negotiated, especially with larger firms. For startups and contractors, 30 days is fair.

Example: If you receive an invoice dated July 1, you should pay it by July 31. If you agreed to “60 days end of month” with the contractor, you’d pay by the end of August. Always clarify this in the contract or purchase order to avoid confusion.

2. Invoicing Practices: Spanish contractors issue an invoice (factura) for their services. A valid invoice must include an invoice number, date, contractor’s details (name, address, NIF), your company details, a service description, the amount, VAT (if applicable), and any IRPF withholding. Make sure to receive these invoices regularly – usually after the work is done or monthly. Some contractors invoice at project end or at milestones; others, like fractional CFOs or long-term consultants, might invoice monthly. The invoice is essential for records and is needed for the contractor to recognize income and for you to recognize an expense.

Note on IRPF in invoices: If the contractor lives in Spain and you’re a Spanish entity, the invoice might include “Retención IRPF (15%) – [amount]”, taking 15% off. This means you’ll pay them the net amount. If you’re a foreign payer or the contractor doesn’t include that (perhaps because you’re not obligated to withhold), you’ll pay the gross amount, and they handle taxes. Talk to the contractor or an accountant if you’re unsure how to handle a Spanish invoice.

3. Payment Methods: The most common way to pay contractors in Spain is via bank transfer. Spain has a strong banking system, and nearly everyone has an IBAN account. When you set up the contract, ask for the contractor’s payment details – usually an IBAN and the account holder's name. Some may accept services like PayPal or Wise, but these can complicate things with fees and currency exchange. Bank transfers in Euros are standard. Many Spanish businesses use the SEPA system, which usually delivers payment within 1-2 working days domestically. If you’re an international company, you might send an international transfer (make sure to cover any fees or use TransferWise/Wise to minimize costs).

4. Late Payment Interest and Penalties: What if you pay late? Under Spanish law, if a payment is late, the contractor can charge interest on late payments (usually a statutory rate set by the government, slightly above the ECB rate) and even a fixed collection fee. In practice, many freelancers hesitate to enforce this for fear of harming the relationship, but repeat late payers may face legal claims. As a good practice, always pay on time. If you have cash flow issues, talk to the contractor and try to get a written agreement for a slight delay. But remember, the law supports the contractor's right to timely payment.

5. Typical Practices and Culture: In Spain, large companies often take 60 days or push limits, but startups and SMEs should stick to 30-day terms. Culturally, freelancers appreciate clients who pay quickly. Some independent professionals may offer a small discount for immediate or upfront payment (though this is informal). On the flip side, some might charge a surcharge or use factoring services if clients insist on 60 days. Good communication is key – set clear expectations that align with legal limits and stick to them. If your startup is overseas, remember that international transfers might take a few days, so start them early to meet deadlines.

6. Currency Considerations: Spain uses the Euro (€). If you’re hiring a contractor outside the Eurozone, you should usually pay in Euros (unless the contractor agrees otherwise). This avoids putting currency risk on the contractor. Many international projects specify USD or GBP, but be aware the contractor will convert that to EUR in their accounts. Paying in Euros to a Spanish bank is simplest and avoids the contractor breaching the rule that invoices must show EUR for tax purposes. If you agree on another currency, ensure the invoice reflects that, along with the EUR equivalent for Spanish tax purposes.

In summary, contractor payments in Spain should be made against proper invoices, on time (30 days is standard), and via reliable methods like bank transfer. Following these practices keeps you compliant with Spanish payment laws and helps build trust with your contractors. This makes them more inclined to continue working with you or go the extra mile on projects.

Legal Risks: Contractor Misclassification in Spain

One of the biggest risks when working with contractors is misclassification. This means treating someone as an “independent contractor” when they’re really an employee under the law. Spain takes this issue seriously. The term “falso autónomo” (false self-employed) describes workers registered as autónomos but who work like employees. This is often done to save the employer money. Spanish labor authorities and the Inspección de Trabajo (Labor Inspectorate) are cracking down on misclassification, and the legal risks are significant for companies.

How can misclassification happen?

Misclassification can happen, sometimes unintentionally, if a contractor is too integrated into your organisation. Examples include:

• Requiring the person to work at your office 9-5 under direct supervision.

• Providing them a company email and title or placing them on the company org chart.

• Prohibiting them from working for anyone else, making them effectively exclusive.

• Having them work only for you year after year on tasks like regular employees.

These conditions resemble an employment relationship. In Spain, if it looks and acts like an employment relationship, the label “contractor” won’t hold. An inspector or judge can reclassify the relationship as an empleado indefinido (permanent employee).

Consequences of Spanish Contractor Misclassification

• Labor Inspections and Fines: If an inspection finds a falso autónomo, your company can face steep fines. The law sees failure to register an employee properly as a serious infringement (infracción grave). Each misclassified worker can trigger a separate fine. As of 2025, fines can range from €3,750 to €12,000 per worker based on severity. For instance, three misclassified contractors could mean penalties up to €36,000, plus the need to correct their status.

• Payment of Back Taxes and Social Security: The company may need to pay all social security contributions avoided by not hiring the person as an employee. In Spain, employers pay about 30% of salary in social security for employees. If a contractor was paid €30,000/year for two years and should have been employed, the company might owe the employer’s quotas retroactively – possibly over €18,000, plus late payment surcharges. Authorities can go back up to 4 years for unpaid contributions and add significant recargos (surcharges of 100% or more).

• Forced Employment Contract: The contractor may be legally recognised as an indefinite employee. This means you must treat them as such (add them to payroll, provide benefits) or, if the relationship ends, possibly pay severance like a full employee. Spanish courts often rule that a misclassified contractor is entitled to the same rights as an employee, including accrued vacation and severance for wrongful dismissal.

• Potential Criminal Liability: In extreme cases, widespread or willful misclassification could lead to criminal charges. The Spanish Penal Code Article 311 penalises companies imposing illegal conditions through false freelance arrangements. This mainly applies to egregious scenarios, like a company with many “fake freelancers” knowingly exploiting them.

How to Avoid Contractor Misclassification in Spain:

• Keep the relationship at arm’s length: Don’t treat your contractor like an employee. Allow them flexibility in how and where they work. Focus on deliverables rather than hours.

• No fixed schedules or integration: You can set timelines and deadlines, but avoid putting contractors on the same shift rotations or attendance tracking as staff. They shouldn’t attend staff meetings about general company policy.

• Document the independence: In the contract and in practice, make it clear they can provide services to others, use their own tools (unless you have a compelling reason to provide them), and work with autonomy. If they have a business name for their freelance services, respect that.

• Duration and exclusivity: Long-term relationships are fine, but be cautious if a contractor works only for you for a long time. In such cases, consider converting them to an employee or ensure you meet the TRADE requirements if applicable. Never forbid a contractor from taking other gigs. You can ask for commitment to your project, but not outright exclusivity like an employment non-compete, unless perhaps during specific project hours.

The Spanish labor authorities want to ensure that jobs deserving of contracts are jobs with contracts. They support genuine freelancers. Spain has around 3 million autónomos, many of whom choose that status freely. Just make sure you’re not using “contractor” to sidestep labor laws. The cost of a mistake is too high, given the fines and damage to your company’s reputation. If in doubt, consult a labor lawyer. If a role has changed into a full-time job, consider transitioning that contractor to a proper employee contract – possibly through an contractor of record if you lack a local entity.

Staying Compliant with Spanish Contractors (Tips and Solutions)

For international startups or HR teams hiring contractors in Spain, compliance can seem overwhelming. Spanish bureaucracy often involves a lot of paperwork, and dealing with it in Spanish can be tough. Plus, managing compliance from afar—making sure your contractor handles taxes and that you meet your obligations—adds complexity. Here are some tips to help you stay compliant with Spanish law while working with international contractors:

• 1. Stay updated on Spanish labor and tax rules: Understand the basics of contractor compliance in Spain. Know how Spanish law defines a contractor versus an employee to structure your engagement right. Keep an eye on changes, like updates to autónomo social security contributions based on income or withholding rates. Spanish government websites can provide valuable information, even if they’re in Spanish. The Agencia Tributaria and Seguridad Social sites have sections for autónomos that outline their obligations. If you need help, consult an international HR expert or a local gestor (administrative agent).

• 2. Use a Contractor of Record (CoR) service: A great way to ensure compliance without setting up your own Spanish entity is to use a Contractor of Record solution. A CoR is a service where a local partner, like Rivermate’s contractor of record service in Spain, officially hires the contractor for you. They manage the administrative tasks—verifying autónomo status, ensuring contract compliance, handling local tax withholdings, and making payments in local currency. They act as the “client of record” in Spain for the contractor while you keep the working relationship. This helps you avoid compliance issues and makes life easier for the contractor since they get paid locally. If you're unsure about Spanish requirements, a Contractor of Record can be a low-hassle, high-compliance option.

• 3. Use global contractor management platforms: Managing payments and paperwork across borders can be slow. Platforms like Rivermate’s global contractor management help ensure compliance while streamlining onboarding, contract e-signing, invoice processing, and payments all in one dashboard. They can create compliant contracts in Spanish and English, gather necessary documents from contractors (like proof of registration or IDs), and schedule payments based on Spanish norms. They also help you navigate currency exchange and localise payments in EUR. This can save you on transfer fees and avoid conversion losses or delays.

• 4. Be aware of data protection and IP laws: When working internationally, remember that Spain (and the EU) has strict data protection laws (GDPR). If your contractor will handle personal data, ensure you have a data processing agreement. Also, address intellectual property in the contract—typically, you want the work product assigned to your company. Under Spanish law, this should be in the contract to be effective. While this isn’t directly about labor compliance, it’s part of the legal framework for working with independent contractors.

• 5. Prepare for labor law differences: If your contractor engagement expands—for instance, if you hire more contractors in Spain or decide to hire full-time employees—be ready to adapt. Contractors cannot be retroactively converted to employees, but you can offer an employment contract moving forward. If you find you need someone full-time, consider switching to an Employer of Record service or setting up an entity to hire employees. Until then, staying compliant within the contractor framework will benefit you.

• 6. Keep clear records and communication: Maintain a paper (or digital) trail of all contracts, invoices, and payments. Document the projects assigned to contractors to show it’s a business-to-business relationship. Communicate openly with your contractor about compliance—confirm they are managing their autónomo obligations. Many experienced Spanish contractors will handle everything, but showing you care about doing things correctly sets a positive tone.

In summary, staying compliant when working with Spanish contractors from abroad is achievable—thousands of companies do it successfully. It’s about combining local knowledge with smart tools or partners. This way, you can tap into Spain’s talent pool without getting caught up in legal complexities.

Why is it Important to Stay Compliant When Hiring Contractors in Spain

Hiring and paying contractors in Spain involves several steps and legal matters, but it can be very rewarding when done correctly. Spain has strong protections for both businesses and freelancers. If you follow the rules on who qualifies as a contractor, set up the relationship right, and meet tax and payment obligations, you can confidently access a flexible workforce.

Keep in mind these core principles: independence defines a contractor, registration and taxes are essential, and timely, documented payments maintain professionalism. Avoid gray areas that can lead to contractor misclassification. The risks are high in Spain, where labor inspectors are vigilant, and fines can be severe. If your startup is outside Spain, use platforms like Contractor of Record solutions to simplify cross-border contracting.

By following this article's guidance—from understanding who qualifies as an autónomo to drafting compliant contracts and managing hiring and paying contractors Spain—you’ll be on the path to a successful, legal collaboration. Spain’s skilled contractors are eager to help your growth, and now you have the knowledge to engage them like an insider.