When foreign entities (non-European ones) need to transfer workforce to Spain in temporary basis to perform activities/services here, but keeping their labor contract with foreign companies, they must think about concrete implications this displacement could mean for both, companies and posted workers.
Bearing this in mind, main considerations or key points for a successful assignment complying with each regulation must include not just an immigration law assessment, but also labor, social security and tax regulations from home and host country.
Firstly, it is crucial to proceed with individual situation assessment: It is highly important to consider every individual circumstance which could influence the whole displacement process. Among them, it is important to double check:
- Employee’s citizenship.
- Relatives who will move with employee.
- Contract location, foreign entity location.
- Employees’ seniority in the company.
- Displacement time (duration, concrete dates, etc).
- If employees will be transferred to a Spanish entity which is part of the same business group than the home country one, or to a client to perform a concrete service agreement.
After collecting minimum prior information, it is time to go over every aspect which must be considered to comply with mandatory regulations:
Social Security:
It is essential to check if there is a Social Security bilateral agreement between home country and Spain to know if the assignee will need to be enrolled at Spanish Social Security, or they will keep covered by home country Social Security along this displacement:
- Bilateral agreement: Home entity must request Social Security coverage certificate to SS authorities in the home country before the assignment start date, with displacement details: Start and end date, home company, host company, etc.
- No Bilateral agreement: In this case, assignee will have to be enrolled at Spanish Social Security along their displacement.
It is highly advisable to get this done and have everything ready before the assignment start date, or there could be inconveniences associated to employees’ Social Security coverage, which worse consequences could mean huge fines to the company, or compensations to employees in case they need any medical assistance and they are not covered for any Social Security, not in the Home nor in the Host country.
Labor conditions:
Since displaced workers will keep their labor contract with home entity located in the foreign country along their assignment to Spain, they will normally keep labor conditions they have in their home country.
However, labor conditions must meet Spanish labor requirements along their displacement:
- Gross salary per year: Same minimum gross salary which is mandatory for the same job position in Spain, according to Spanish labor regulations (which update minimum gross salary every year), and collective agreement applicable to the Spanish entity.
- Maximum of 40 hours a week (which will be reduced to 37,5 hours a week soon).
- Same holidays than any other employee performing same job position.
- Overall: same labor rights than any other employee in Spain.
This means labor conditions must accommodate from home country to Spain in order to comply with Spanish labor regulations, or company could face several fines too.
Tax circumstances:
Every temporary assignment can have several tax consequences for both, company and employee. In order to minimize tax burden, it is advisable that they check:
- If home and host countries have a double taxation agreement.
- What is a tax resident according to home and host countries regulations.
- Displacement duration.
- Displacement dates: Spanish tax authorities considered a citizen as tax resident automatically if they stay in Spain more than 183 in natural years (from January 1st to December 31st).
- What concrete benefits assignee can get to reduce tax burden, according to tax regulations from both countries.
Considering prior information, company and assignee can prepare a tax strategy to get the most beneficial situation possible.
Visa options:
From Immigration perspective, there is a huge difference if transferred employee is a European citizen, or a non-EU citizen.
If they are European citizens, they can move, live and work in Spain with no further limitation than keeping their European citizenship, for foreign or national entities, as employees or as freelancers, they just need to proceed with few local registrations, such as EU NIE card, Town Hell registration, etc., but they will keep in a legal situation along their whole stay.
However, if posted workers are non-EU citizens, they will need a concrete visa or work permit to be able to start working in Spain. In this case, the most feasible one would be Intracompany Transfer visa:
- They will keep their job contract with the home entity.
- It is aimed to non-EU citizens who will be transferred in temporary basis to Spain, keeping their labor contract with home entity located in a non-EU country.
- Both companies (from non-EU country and from Spain) must be part of the same business group, or have a service agreement signed between them stating one of the hired services includes employees displacement.
- Home entity will have to commit to keep job conditions along the displacement (salary, holidays, Social Security, etc.), according to Spanish labor law.
- If there is a SS bilateral agreement: They will need SS coverage certificate issued by Social Security authorities from the home country. If there is not a SS Bilateral Agreement: The employees will have to be registered at Spanish Social Security.
- Assignee must have a minimum seniority of 3 months working with the foreign entity.
- Assignee must be a specialist/manager with 3 years of previous work experience related to job position, or University education diploma related to job position.
SUMMARY:
Summing up, when one foreign-non-EU company plans an employee’s temporary assignment to Spain, keeping assignee’s labor contract with the foreign entity along the displacement, they must assess several implications to comply with every regulation involved, from Immigration, Labor, Tax and Social Security perspective, designing a transference/displacement plan tailored-made for each individual case, considering very aspect which can influence whole operation.
By Agustín Sáez