Running payroll: payslips, withholding and monthly Social Security

Terms used

• Gestoría — A gestoría is an administrative advisory firm that handles payroll, Social Security and tax paperwork for businesses and individuals.
• IRPF — IRPF is Spain's personal income tax, which employers withhold from salaries and pay to the tax agency.
• Modelo 111 — Modelo 111 is the form employers file to pay the income tax withheld from employees' pay.
• Modelo 190 — Modelo 190 is the yearly summary of withholdings on employment income that employers file in January.
• Sistema RED — Sistema RED is the Social Security online system employers or their gestoría use to register staff and settle contributions.
• Cl@ve — Cl@ve is the government's online identity system, used to sign in to official websites.
• Recibí — The recibí is the employee's signed receipt confirming they received their payslip.

Key rules

• Social Security: Contributions for each month are settled by the last day of the month in which the work is done.
• Modelo 111: File it every quarter even if you withheld nothing, as a nil return.
• Responsibility: Hiring a gestoría does not move your legal responsibility to them.
• January filing: Modelo 190 is due between 1 and 31 January for the previous year.

What monthly payroll means

Each month you give every employee a compliant payslip, settle Social Security, and file the income tax you withheld. Once a year you file a summary and give each employee a certificate. You can do all of this yourself or pass it to a gestoría or an online payroll provider. You stay legally responsible either way.

The payslip

Use the standard payslip model. It must show:

• employer and employee details, including your tax number, your Social Security registration number, and the employee's job category and seniority
• the pay period
• what the employee earns: base salary, supplements, overtime, extra pay and non-salary items
• deductions: the employee's Social Security contributions, IRPF withholding and anything else
• the net amount
• the contribution bases

Give it to the employee on paper or electronically, with a signed receipt (recibí), when you pay the salary. Some collective agreements require a different approved model, so check yours.

Social Security every month

You settle contributions every month, by the last day of the month in which the work is done. You do this through Sistema RED, using the Seguridad Social online office. Social Security calculates the contributions and you confirm them. Pay by direct debit or bank transfer. Late payment brings surcharges.

To use Sistema RED yourself, request access for your own account with an electronic certificate or Cl@ve. If a gestoría handles it, you sign an authorisation request to the Social Security treasury. The gestoría then submits registrations, changes, calculations and settlements for you. You can revoke the authorisation at any time.

Income tax withholding

You withhold IRPF from each payslip and pay it to the tax agency using modelo 111, filed online. Filing is quarterly, by the 20th of April, July and October, and by 30 January for the last quarter. Large filers file monthly, by the 20th of the following month. Pay by direct debit or bank transfer. Direct debit deadlines fall a few days before the filing deadline. If you withheld nothing in a period, file a nil return.

Annual summaries

In January (1 to 31), file modelo 190, the yearly summary of withholdings for the previous year. Also give each employee a certificate of withholdings, normally before the income tax campaign starts. It shows gross pay, Social Security contributions, withholdings and the employee's personal and family data.

In-house or gestoría?

Doing it yourself saves the fee but means learning the online systems and keeping every deadline. A gestoría or online provider usually charges a monthly fee covering payslips, Social Security and tax filings, often with a one-off charge for registration or contract formalities. Many price per payslip, with a lower rate for each extra employee. Prices vary by city and provider, so ask several for current quotes.

The timeline, documents, checklist and questions below cover the dates and steps in more detail.

Timeline and deadlines

• Settle Social Security contributions for the month worked: every month, by the last day of the month

• File IRPF withholdings (modelo 111) for the last quarter: by 30 January

• File monthly instead of quarterly if you are a large filer: by the 20th of the following month

• File the annual withholdings summary (modelo 190): between 1 and 31 January for the previous year

• Give each employee their certificate of withholdings: generally before the income tax campaign starts

Documents you need

• Monthly payslip for each employee, on the standard model, showing employer and employee details, pay period, earnings, deductions, net amount and contribution bases. You issue it, on paper or electronically, with a signed receipt (recibí) when salary is paid.

• Certificate of withholdings (certificado de retenciones e ingresos a cuenta) for each employee, issued by you, showing gross pay, Social Security contributions, withholdings and the employee's personal and family data.

• Annual summary of withholdings on employment income (modelo 190), filed online by you with the Agencia Tributaria, Spain's tax agency, in January for the previous year.

• Signed authorisation for your gestoría as RED user, if it handles Social Security for you. You sign the request to the Social Security treasury.

Checklist

• Decide whether you run payroll yourself or hand it to a gestoría or online payroll provider.

• Request Sistema RED access through the Seguridad Social online office, using an electronic certificate or Cl@ve.

• Sign the authorisation request to the Social Security treasury if a gestoría will act as your RED user.

Frequently asked questions

Can a gestoría run Social Security filings for me?

Yes, a gestoría can act as your authorised RED user once you sign an authorisation request to the Social Security treasury, which assigns it your account codes. It can then submit registrations, changes and monthly contributions for you. You stay legally responsible, and you can revoke the authorisation at any time.

How do I file IRPF withholdings if I had none this period?

You still file a nil return for the period if you had no withholdings. Filing is online through the Agencia Tributaria, Spain's tax agency, and the usual employer deadlines are the 20th of April, July and October, and 30 January for the last quarter.

When must I give my employee the annual withholding certificate?

You give each employee their certificate of withholdings generally before the income tax campaign starts. It shows gross pay, Social Security contributions, withholdings and the employee's personal and family data. You also file the yearly summary yourself between 1 and 31 January.

What does a gestoría charge to run payroll for one employee?

Most charge a monthly fee for one employee that covers payslips, Social Security and tax filings. Many price per payslip with a lower rate for each extra employee, and add a one-off charge for registration or contract formalities. Get quotes from several providers.