Contracting In Spain: What You Need To Know

18 October 2023

Spain is one of the more popular tourism and holiday destinations in Europe, but it has also become one of the top locations for contractors looking to work overseas.

However, navigating the Spanish taxation and legislative system can be a complex task at the best of times, let alone without specialist knowledge of domestic tax processes.

With that in mind, how do professionals who are contracting in Spain remain compliant and in which sectors are skills particularly sought after?

Spain overview

The Spanish economy is the fourth largest in the EU and 14th largest in the world and is experiencing something of a boom period, with projected economic growth of 2.1% by the end of this year. The country is expanding at a faster rate than its other European counterparts which is partly down to the launch of its post-pandemic ‘Recovery Plan’ which will see the government invest up to €163 billion in the five years from 2021 to 2026 in programmes designed to modernise the Spanish economy.

In addition, over the last year, more than one million new jobs have been created – far more than before a labour reform plan was implemented in efforts to reduce unemployment levels amongst young people. However, despite this positivity, Spain does face some issues, not least the ageing population which is putting more strain on the domestic financial situation. Across its entire economy, Spain also has a relatively low level of available jobs when compared to other neighbouring nations, however, skilled professionals operating in a few specific sectors are in significant demand.

Cyber skills

One of the main areas where international contractors are particularly highly sought after in Spain is cybersecurity. Worryingly for businesses based here, in 2021 Spain suffered more remote desktop attacks than anywhere else in the world, with over 51 billion attempts by criminals to illegally infiltrate data and records across the country. The scale of the cyber security issues has become so severe that communications giant, Telefonica, has labelled Spain as ‘a vulnerable country’. These risks have forced firms into bolstering their defences, however, the domestic sector is underdeveloped and not yet at the scale to be able to support companies properly, which is why so many experts are being recruited from around the world. Professionals with cyber security expertise are likely to be able to find a significant number of opportunities within Spanish businesses.

Green demand

Like so many other countries, Spain is also focusing on boosting its renewable energy offering in an attempt to tackle the climate crisis. This has led to a huge number of schemes being launched, with the Spanish workforce struggling to meet the growing demand for professionals with experience working within green projects. The Jerez Sigma Photovoltaic complex is one such example, as is the Cepsa Andalusian Green Hydrogen Valley, which will reduce carbon emissions in the area by around six million tonnes per annum when complete. The project involves a major €2 billion investment in wind and solar energy schemes that will provide sustainable energy for the production of green hydrogen.

On top of these megaprojects, CIP – the world’s largest investor in greenfield renewable infrastructure – has formed a consortium with Enagas Renovable and Fertiberia that will lead to the installation of additional facilities designed to develop green hydrogen in the Levante region where a huge array of refineries, fertiliser plants, and other energy-intensive industries are located. Unlike the other two ‘green schemes’ mentioned above, The Catalina Project, as it has become known, is well advanced and, by 2027, a huge 500MW electrolyser will lead to the development of 50,000 tonnes of green hydrogen borne from 1GW of wind and solar power, helping to drastically reduce emissions in this part of the country. As you may have gathered, if you work in the renewable industry, it’s safe to say that there are a significant number of opportunities available in Spain.

How do you remain compliant when contracting in Spain?

However, while there are a huge number of opportunities for contractors in Spain, there are also risks. Thankfully, border restrictions set up during the pandemic have been dropped; which is one less thing to worry about, but any professional operating in Spain will need to ensure they are complying with domestic tax regulations before committing to a role.

Firstly, if you are based outside of the EU and are looking to work in Spain you will have a number of visa options available, of which two are most viable; the long-term work visa and the EU blue card. Obtaining one of these will usually require a visit to the Spanish embassy, though in some instances the deemed employer may be able to make the application on your behalf.

Spain has a Shortage Occupation list (which includes roles in both green energy production and cybersecurity) and anyone who can fulfil one of these positions and meets the criteria laid out by the government can work here as a highly-skilled employee. You will also need to apply for a work visa through the Ministry of Labour – this can sometimes take up to eight months to be approved so you will need to factor this in when taking on a role.

All contractors will also need a Numero De Identificacion de Extranjeros (NIE) number to remain compliant. This is the Spanish equivalent of a national insurance number and allows you to register with the Spanish authorities to pay taxes during your contract. If the contract lasts for more than 90 days, you will also need to sign up for the ‘foreigners register’. This process is separate to the NIE but also necessary to secure your tax residency in Spain.

While the process can be complex and time-consuming, ensuring you are fully compliant with legislation should be your top priority when committing to a contracting role in Spain. Any professionals who are found to be breaking the law will potentially be handed a major fine or even prison sentences in some cases. If you are at all unsure about your ability to navigate these processes when considering a contract role here then partner with an expert firm before it’s too late. If you’re looking for advice then speak to our specialist compliance team.

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