What is an Employer of Record (EOR)?

An EOR is a third-party organization that legally employs workers on your behalf in a country where you don't have a legal entity. They handle payroll, taxes, social security, and employment compliance while you manage the day-to-day work.

How much does an EOR cost in Spain?

EOR services in Spain typically cost $400–$700 per employee per month, though some providers charge a percentage of salary (3–10%). Additional fees may apply for onboarding and termination.

What is the difference between an EOR and a PEO?

An EOR is the legal employer of your workers and takes full liability. A PEO (Professional Employer Organization) co-employs workers alongside your company, sharing employer responsibilities. EORs are used when you don't have a local entity; PEOs require one.

Can I hire employees in Spain without a local company?

Yes, by using an Employer of Record. The EOR acts as the legal employer in Spain, handling all compliance, payroll, and tax obligations while you direct the employee's work.

Do EOR employees get the same rights as direct employees?

Yes. EOR employees in Spain are entitled to the same statutory rights as any other employee: minimum vacation (22 working days), social security coverage, severance protections, and all benefits required by Spanish labor law and applicable collective agreements.

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Employer of Record (EOR) in Spain

How to hire employees in Spain without setting up a local entity — using an Employer of Record.

What Is an EOR?

An Employer of Record is a third-party organization that legally employs workers on your behalf in a country where you don't have a legal entity. Instead of setting up a Spanish subsidiary, the EOR becomes the official employer on paper.

The EOR handles payroll, tax withholding, social security contributions, employment contracts, and compliance with local labor law. This means you don't need to navigate Spain's complex employment regulations on your own.

The day-to-day work relationship remains between you and the employee — the EOR is purely the legal employer. You direct the work, set goals, and manage performance as you normally would.

This model is common in international hiring when a company wants to test a new market or hire a few employees abroad quickly without the overhead of establishing a full legal presence.

When to Use an EOR

An EOR makes sense in several scenarios. Here are the most common reasons companies choose this route for hiring in Spain:

No Local Entity

You want to hire in Spain but don't have (or don't want to open) a Spanish subsidiary. An EOR lets you employ people legally without one.

Testing the Market

Hiring 1–5 employees before committing to a full entity. An EOR lets you validate the market with minimal upfront investment.

Speed

Setting up a Spanish SL (sociedad limitada) takes 4–8 weeks. An EOR can onboard a new employee in days.

Compliance Confidence

Spanish employment law is complex — an EOR handles contracts, payroll, social security, and termination rules so you don't have to.

Short-Term Projects

Contract-based work where a permanent entity doesn't make sense. Hire for a specific duration without the commitment of establishing a legal presence in Spain.

EOR vs Local Entity

Deciding between an EOR and setting up your own Spanish company? Here's how they compare:

Setup Time

EOR: Days

Entity: 4–8 weeks

Setup Cost

EOR: None

Entity: €3,000–€5,000+

Ongoing Cost

EOR: $400–$700/employee/month

Entity: Accounting + legal + admin

Control

EOR: Limited (payroll, benefits via EOR)

Entity: Full control

Best For

EOR: 1–10 employees

Entity: 10+ employees or long-term commitment

IP Protection

EOR: Via service agreement

Entity: Direct ownership

EOR vs Hiring Contractors

Some companies consider hiring contractors (autónomos) instead of using an EOR. While contractors can be the right choice for truly independent, project-based work, there are significant risks to be aware of.

Misclassification Risk

Spain actively enforces "falso autónomo" (false self-employment) rules. If a contractor works like an employee — fixed hours, single client, company equipment — you could face fines and back-payments of social security contributions. An EOR eliminates this risk entirely by providing proper employment contracts compliant with Spanish labor law.

Contractors (autónomos) manage their own taxes and social security contributions. Employees, on the other hand, get full benefits and protections including paid vacation, sick leave, and severance rights.

The rule of thumb: use contractors for truly independent, project-based work with clear deliverables. Use an EOR for ongoing, full-time roles where you direct the work and set the schedule.

Popular EOR Providers

Several well-known EOR providers support hiring in Spain, ranging from $199 to $699+ per employee per month. Here are a few of the most popular:

RemoFirst

$199/mo

Budget-friendly with 180+ country coverage.

Deel

$599/mo

Most popular — 100+ integrations, fast onboarding.

Remote

$599/mo

Owns all local entities — no intermediaries.

View full provider comparison (10 providers)

Costs & Pricing

Understanding the true cost of an EOR helps you compare it against the alternative of opening your own entity. Here's what to expect:

Per-Employee Fee

$400 – $700/month

Most common pricing model

Percentage of Salary

3% – 10%

Some providers use this model instead

Additional Costs to Watch For

Onboarding fees (one-time setup per employee)
Offboarding and termination fees
Benefits administration surcharges
Currency conversion fees if paying in non-EUR

Compare total EOR costs with running your own entity: accounting (~€200/month), legal retainer, registered office, and annual filing fees. For 1–5 employees, an EOR is almost always cheaper than establishing a local entity. As you scale past 10 employees, the math typically shifts in favour of your own Spanish company.

Check our salary guide to understand the full cost of employing someone in Spain, including social security contributions on top of gross salary.

Legal Considerations

Intellectual Property

Ensure your EOR agreement includes clear IP assignment clauses. Under Spanish law, IP created by employees may default to the employer (the EOR) without explicit assignment. Your contract should specify that all work product belongs to your company, not the EOR.

Termination

Spanish law provides strong employee protections. Terminating an employee through an EOR still requires compliance with severance rules — 20 days per year worked for objective dismissal, 33 days for unfair dismissal. Your EOR should handle the process, but understand the costs upfront. See our work laws guide for details on employee protections.

Benefits Parity

EOR employees are entitled to the same statutory benefits as direct employees: vacation (minimum 22 working days), sick leave, social security coverage, and all protections under Spanish labor law and applicable collective agreements. Some EORs also offer supplementary benefits like private health insurance.

Data Protection

Your EOR processes employee personal data on your behalf. Ensure they comply with GDPR and Spain's LOPDGDD (Ley Orgánica de Protección de Datos Personales y garantía de los derechos digitales). A proper data processing agreement should be in place before onboarding any employees.

Last updated: February 2026. EOR regulations and pricing change — always verify with providers directly.

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