Spain: EOR or a Spanish entity

What actually differs between the two routes in Spain?

Not the setup cost, which is where most comparisons start and where Spain has quietly stopped being interesting.

Two rows in that table decide most real cases: what having people in Spain does to corporate tax and who carries the ongoing load. A third consideration sits outside the table entirely and in Spain it is the one that deserves the most thought.

Is incorporation still the barrier it used to be?

No and any comparison built on the old figure is out of date.

A Spanish limited company needed 3,000 euros of share capital until the 2022 business-creation reform cut the minimum to one euro. That is a genuine change and it removes the argument that incorporation is capital-intensive.

It does not remove the 3,000 euros. Until the legal reserve plus the capital reach that figure, at least a fifth of profits must go to the reserve, and if the company is wound up with assets insufficient to meet its obligations the members are jointly liable for the difference between 3,000 euros and the subscribed capital. So the obligation has moved from the front of the process to the background of it, which is easier on cash flow and no different in substance.

What incorporation still costs is attention rather than capital: notarisation, registration, a tax identification number and a foreigner identification number for any non-resident director, before anything can be filed at all. The honest conclusion is that setup cost is no longer a reason to choose either route in Spain. It has been replaced by three questions that are harder and more consequential.

What does having people in Spain do to corporate tax?

It raises a question that has no bright-line answer, which is exactly why it needs answering deliberately rather than by default.

Spanish non-resident income tax treats a foreign company as having a permanent establishment where it carries on all or part of its activity in Spain through a fixed place of business such as an office or branch, or through an agent acting on its behalf with authority to conclude contracts in its name. If a permanent establishment exists, Spanish corporate tax applies to the profits attributable to it and the compliance that comes with it applies too.

A single employee doing internal or technical work from home is at the lower end of that risk. A salesperson who negotiates and closes Spanish business, or a country manager building a local operation, sits at the higher end and the more the role looks like the company doing business in Spain rather than an individual working in Spain, the more likely the answer is that a permanent establishment has been created.

Using an Employer of Record does not settle this. It removes the employment-registration question and it does not remove the permanent-establishment question, because that turns on what the work is and how it is directed, not on who signs the payslip. What it does do is separate the two problems, so a company can resolve the tax question on its own timetable rather than at the same time as its first hire.

How does Article 43 bear on the choice?

This is the Spanish instrument and it decides more than the commercial comparison does.

Article 43 of the Estatuto de los Trabajadores reserves the assignment of workers to another company to authorised temporary-work agencies. Assignment outside that channel is unlawful: the worker may elect to become permanent in either company and the conduct is a very serious infringement carrying fines from 7,501 to 225,018 euros. It is actively enforced and not only against arrangements outside that channel. In June 2026 the Supreme Court upheld a 180,000 euro penalty against a company that used a temporary-work agency's placement contracts to staff permanent posts between 2019 and 2022.

What is examined is substance rather than description. Does the company holding the contract have its own stable activity, organisation and means? Does it genuinely perform the functions of an employer, or does the arrangement amount to supplying people to be directed by someone else? The Court of Justice of the European Union sharpened that analysis in October 2024, holding that administrative authorisation is not what makes a company a temporary-work agency under the EU directive and that what matters is who organises and supervises the work. Spanish practitioners read that as significant for arrangements of this kind and the national position continues to develop.

Two things follow for a company weighing the routes.

On the entity side, incorporating changes the question rather than removing it. A Spanish company that employs its own staff for its own activity is not hiring them in order to assign them to someone else, which is the conduct Article 43 is aimed at. But Article 43 has no carve-out for subsidiaries: it still bites where the employing company has no activity, organisation or means of its own and the work is organised and supervised from the parent, and where it does, both companies are jointly liable. Incorporation is worth doing for the clarity it brings, not because it makes the question disappear.

On the Employer of Record side, the question does not disappear but it is answerable and the answer is structural. How is the Spanish employing company constituted, what does it do besides hold contracts and how is direction of the work understood between the parties? Those are reasonable questions to put to any provider operating in Spain and the quality of the answer is a better signal than anything on a pricing page.

What does running your own Spanish company actually involve?

A steady monthly rhythm, most of which does not stop when headcount is low.

That last step is what changes the arithmetic as a team grows. Employer of Record fees scale with headcount; the fixed cost of running a Spanish company does not. There is a crossover point for every business and it usually arrives earlier than expected once the local finance and payroll work is priced honestly rather than absorbed.

When is each route right?

The two routes are not mutually exclusive over time and treating them as a sequence rather than a choice is usually the better plan: employ through an Employer of Record while the Spanish position is being established, then transfer employment into your own company when the headcount, the trading activity or the tax analysis makes incorporation the right answer.

Aspirock runs the Employer of Record route into Spain for companies that are not ready to incorporate and supports the transfer of employment to a client's own Spanish company when that point arrives. For the full cost picture on either route, see what a Spanish hire costs and for the statutory framework both routes have to meet, see hiring in Spain.