EMPLOYMENT – STATE FORMALITIES
Before employment can commence in Spain certain formalities need to be followed. There are distinctions made between Employees, Self employed persons and those employed using their own company:
An employer cannot issue a contract of employment until the employee has a “Número Identificatión de Extranjero (NIE)” – ( National Identification number) and a social security number. As in the UK all taxes are deducted by the employer and paid to the tax authorities.
2. Self Employed
They will at first have obtained a “Número Identificatión de Extranjero (NIE)” – ( National Identification number) and will need a social security number. They will need to instruct a local accountant to register them for “Autonomo status” with the State Tax Administration Agency (AEAT) the agency responsible for managing the Spanish tax system. “Autonomo status” is the Spanish equivalent of self-employed or freelance and also applies to people operating (unincorporated) small businesses. Accounts have to be filed and tax paid on a quarterly basis.
3. Employees of own companies
Companies would be incorporated businesses with a seperate legal identity similar to private limited companies in the UK. As in the case of the self employed an accountant has to used for the business to be registered with the State Tax Administration Agency (AEAT) the agency responsible for managing the Spanish tax system. There is a requirement, like for the self employed, for accounts to be filed and tax paid on a quarterly basis. There is an additional requirement before registration can be made with the State Tax Administration Agency (AEAT) that is: a bank account must be opened with an amount of not less than €3,000 deposited.
How to obtain a Social Security Number
An application using a TA1 (Social Security application form) should be made to the nearest office of the “Tesorería General de la Seguridad Social” (General Treasury of Social Secuity). The location of their offices can be found visiting by www.seg-social.es/Internet_1/Oficinas/ ; an application form can be down loaded.
The applicant will need to provide a Número Identificatión de Extranjero (NIE) – ( National Identification number) and produce a passport.
Employers request a social security number for an employee if they don’t already have one. Self-employed workers may make the application themselves or hire an intermediary (lawyer or accountant) to make the application on their behalf.
Obtaining the NIE number:
These are issued by the National Police and can be obtained by attending a local National Police Station and requesting an “EX18 NIE” form and “RESIDENCIA” application form. For non -Spanish speaking applicants it is advisable to be accompanied by someone who does. Alternatively you can collect an application form to take away for completion.
You will need to take with you your passport, together with a photo copy of it, and two passport size coloured photographs.
An application must provide a Spanish address. This is required for communication purposes. If you do not have a Spanish residence this can be another persons address but they will have to accept responsibility to notify you of any communications received.
Upon submitting your completed forms you will be issued with a Form 790 which you will need to take to your bank so that the police administration fee can be paid by them on your behalf. Your bank will issue a receipt confirming that the fee has been paid which you will need to give to the police when you collect your NIE and Residencia certificates.
This identification number is used to track the individual’s financial and official activities in Spain. Spanish citizens have a NIF number (Fiscal Identification Number / Número de Identificación Fiscal) which is their DNI (National Identity Document/ Documento Nacional de Identitidad) followed by a letter. The NIE number always starts with “X” and is followed by seven numbers and a letter. The number is personal to an individual; it is not transferable and it does not expire.
Notification needs to be made when there is a change of address.