If you’re an employee planning to live and work in Spain under the Digital Nomad Visa, there’s an alternative to obtaining social security certificates of coverage.
Instead of being forced to switching to independent contractor status and losing the advantages of being an employee, you can ask your employer to register you for social security in Spain. This not only allows you to retain your employee benefits but may also open the door to qualifying for Beckham Law.
This option is particularly relevant for individuals with a high income who reside in a country that lacks a social security agreement recognised by Spain's UGE (such as the United States). It is also applicable to UK citizens whose 2-year A1 form is approaching its end.
We’ll explain how it works and provide tips on convincing your company that it’s a smart decision.
How Expensive is Spanish Social Security?
With Spain’s top-notch healthcare system and generous public pensions, you’d probably imagine Spanish companies pay a lot of social security.
And you'd be correct. In Spain, employers contribute roughly 33% of an employee's gross salary. (The exact amount depends on the employee's classification.)
This means that, if you employer is to pay you through the Spanish system, it will cost them one-third of your salary in social security contributions. For instance, if you earn €10,000 per month, the total cost to your employer would be approximately €13,333.
However, there’s good news for high earners - in Spain, social security contributions had an upper limit (or cap) until the end of 2024. This cap is being gradually phased out, but as it's being done slowly over a period of 20 years, this route is still viable for high-earning digital nomads.
Before 2025: With Cap
Until the end of 2024, no extra social security payments were charged on any salary earned above €56,646. This meant that the maximum annual cost to the employer would never be more than approximately €18,467, regardless of how high the employees salary was.
For example:
- If an employee earned €56,646: the employer would pay €18,467
- If an employee earned €100,000: the employer would also pay €18,467.
From 2025 Onwards: Gradual Elimination of the Cap
The government decided it was time to tackle Spain's huge pension deficit and effectively end this cap by adding a social security surcharge for high earners. This is being done slowly and to begin with there will be little noticeable effect. To demonstrate:
- If an employee earns €58,914: the employer pays €19,205
- If an employee earns €100,000: the employer pays €19,240 (an extra €35!).
The surcharge will increase gradually until 2045, when it will reach 7% (it is currently at 1.17% for the top slice).
Although it is gradually decreasing, the cap ensures that Spanish social security costs remain competitive—and in some cases even lower—for high salaries compared to those in other countries..
How Spanish Social Security Compares To UK National Insurance
UK employers are required to pay National Insurance Contributions (NICs) at the rate of 13.8% of employees' earnings above the Secondary Threshold, which is £175 per week (or £9,100 per year) for the 2024/25 tax year.
Unlike in Spain, there is no cap for employer NICs, meaning the 13.8% applies to all earnings above the threshold.
As we've seen above, social security contributions cost Spanish employers approximately 33% of an employee's salary, with a slowly phasing out cap of €58,914. In contrast, UK employers pay 13.8% with no upper limit. This means that, beyond a certain salary level, employers in Spain will pay less in social security compared to their UK counterparts.
What is the salary threshold where hiring an employee in Spain becomes more cost-effective for social security than in the UK? Our calculations place it at roughly £10,586 per month, or £127,032 per year.
From April 2025 onwards
National Insurance is set to rise (source). UK employers will soon face a National Insurance contribution rate of 15% for secondary Class 1 NICs, again with no upper limit, applicable to employees earning above the secondary threshold of £5,000 annually. As a result, the salary level at which hiring an employee in Spain becomes more cost-effective in terms of social security will fall to approximately £9,459 per month, or £113,508 per year.
If you are earning more than that, you can forget the A1 certificate and go straight to convincing your employer to register for Spanish social security.
How Spanish Social Security Compares To US Social Security
In the United States, employers are required to pay Social Security taxes as part of the Federal Insurance Contributions Act (FICA). Here's how it works (source):
- Employers pay 6.2% of an employee's wages toward Social Security, up to the annual wage base limit. For 2025, the upper limit or cap is $176,100. This means employers only pay Social Security on wages up to this limit.
- Employers also pay 1.45% for Medicare taxes, with no wage limit.
Combined, the total FICA tax rate for employers is 7.65% of an employee's wages.
As we've discussed above, social security contributions cost Spanish employers around 33% of an employee's salary, with a gradually transitioning out cap set at €58,914. By comparison, U.S. employers contribute just 6.2%, capped at $176,100, plus additional Medicare contributions with no upper limit.
Due to the significant difference in percentage rates, an employee would need to earn over a million dollars annually before it becomes more cost-effective for an employer to hire them in Spain. However, let's not forget that in the US, over half of employers pay for health coverage for employees. In 2024, the average amount employers contributed toward family health coverage was $19,276 (source).
When factoring in health coverage for employees with families, employers may find it more cost-effective to hire employees in Spain compared to the United States, despite the higher social security rate. In Spain, the annual social security cost on a €100,000 salary (around $100,362) would be €19,240 (approximately $19,936). Since Spain has a strong public healthcare system, it’s uncommon for employers to offer private health insurance (and when they do, premiums are typically under $100 per month).
In conclusion, if you currently have good and costly health coverage through your employer in the US, you can leverage this as a negotiation tool to persuade them to enroll you in Spain's social security system.
Benefits of Your Employer Paying Social Security
Convincing your employer becomes easier when you highlight the tangible benefits, not just for you, but also for them.
For You:
1. Beckham Law Benefits
If your employer pays Spanish social security, you can qualify for the Beckham Law’s favourable tax regime (provided you meet all conditions). This means:
- A flat 24% income tax rate (up to €600,000), instead of the standard top bracket rate of up to 47%.
- Exemption from paying tax in Spain on your worldwide income — only Spanish-sourced income is taxable.
- No Wealth Tax payable (provided you don't hold substantial assets in Spain), and no need to file a Modelo 720.
2. Access to Spanish Public Healthcare / Future Pension
Social security contributions grant you access to Spain’s high-quality public healthcare system, and if you work in the country for long enough you'll also benefit from the generous pension system.
3. Maintaining Employee Protections & Rights
As an employee with a Spanish labour contract, you’re covered by Spanish employment laws, which means you have important protections and rights, including generous severance packages if you’re ever laid off.
For Your Employer:
1. Employee Satisfaction & Retention
Providing support during your time in Spain fosters goodwill, strengthens loyalty, and boosts productivity. They want to keep you on their team.
2. Business Growth Potential
Employing staff in Spain can significantly enhance an organisation’s global presence. However, it’s important to consider potential implications—see the permanent establishment section below.
3. Potential Cost Savings On High Salaries
Our calculations (see above) show that for high earners, hiring an employee in Spain can actually be more cost-effective in terms of social security compared to the US or the UK.
Addressing Employer Concerns
Your employer might hesitate due to the complexities and uncertainties of navigating an unfamiliar foreign system. This concern is understandable, which is why it’s so important to tackle these issues carefully and effectively.
Permanent Establishment Issues
Some employers worry about becoming liable to pay Spanish corporation tax as a result of having an employee working in Spain. This risk is particularly significant if the employee is engaged in activities such as making sales, signing contracts, or performing other similar business operations on behalf of the employer. However, if your role does not involve these types of tasks, the likelihood of being classified as a permanent establishment is low.
Compliance with Spanish Laws
Employers often face concerns about navigating Spanish employment and tax laws, fearing potential fines or unexpected costs from non-compliance. Questions frequently arise, such as: What happens if an employee has an accident or becomes pregnant? How can they be sure that taxes are filed and paid correctly each year? The solution lies in partnering with a trusted service like Move To Spain Guide, providing the expertise, confidence, and support needed to stay compliant and stress-free.
Expense
As discussed above, employing someone in Spain comes with significant costs. If your salary falls below the threshold where it becomes more affordable for the employer, you might consider—only as a last resort—offering a pay cut to help offset some of the expense. This could be a worthwhile trade-off if you plan to benefit from the Beckham law, as its reduced tax rates might compensate for the lower salary.
Process for Setting Up
Assure your employer that establishing Spanish social security payments is a simple and efficient process with the right professional guidance, requiring minimal time and effort on their part.
What You'll Need From The Employer:
1. Company documents translated into Spanish, with Apostilles.
2. Passport copies of the company director(s).
3. A Power of Attorney from the director(s) authorising legal representation in Spain.
The Steps Involved:
1. Company Registration in Spain
Your employer’s company will be registered as a non-resident business without permanent establishment, receiving a non-resident tax ID.
2. Registration with Spanish Social Security
The company will then be assigned a CCC (employer social security number) to start making contributions.
3. Opening of a Bank Account
A Spanish bank account is essential for setting up monthly direct debit payments for social security.
Move To Spain Guide will take care of all of the above tasks.
Costs
Setup Fee: this starts at €2,000, depending on complexity.
Ongoing Costs:
- Monthly Social security contributions will be paid by direct debit from the Spanish bank account (as explained earlier).
- Annual fee for legal and administrative support to ensure compliance (starting at €1,500 per year for one employee).
If you'd like to speak to us about this further, feel free to contact us.
Final Thoughts
Getting your employer on board to pay Spanish social security can open doors for you and them. For you, it’s about being able to keep your job, accessing valuable tax benefits through the Beckham Law, and enjoying public healthcare. For your employer, it’s an opportunity to support talent like you and keep you on their team.
Approach the conversation with clear facts about costs, benefits, and the process. Offer solutions to potential concerns, and be professional but persistent.
Considering relocating to Spain and need to get started with social security arrangements? Reach out for expert guidance and ensure your transition is as smooth as possible.
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