Spanish Payslip Explained: How To Read Your Payslip In Spain?

The Spanish payslip is known to be one of the most complex in Europe. If you are a foreigner, this becomes especially complicated since you might not be familiar with some of the terminology or abbreviations that are used. But fear not, you are in the right place. This guide will give you all the details you need for understanding your payslip.

Salary Deductions In Spain

The idea behind gross and net salary might seem intuitive and easy to understand in the beginning. But you must also understand the intricacies behind the entire process. When you receive your payslip in Spain, you might be surprised to see numerous deductions on it. These can include numerous items like taxes and social security contributions. Contributions to the Spanish Social Security are mandatory and are meant to cover things like disability leave, unemployment benefits, health insurance, future pension and paid parental leave whenever you will need them. The taxes include IRPF withholding, which means that an advance payment is made on your behalf for your income tax.

Another part of deductions is the payment in kind, if an employee receives this. If you receive products in kind as part of your salary, or if you allocate a percentage of your salary to specific products provided by your employer, this amount will be deducted from your gross salary in the payslip.

The deductions made from your salary in Spain therefore will depend on a number of factors like your salary bracket, the autonomous region you reside and work in, and whether you have opted for health insurance, among other factors.

How To Read A Spanish Payslip?

The payslip is commonly referred to as the nomina in Spain. You can identify three distinct sections in your payslip. These include:

Personal Information

The header will include all the information about both the employer and the employee.

NIF – Spanish Tax Identification Number that can be used to identify the company that is the employer
Empresa – company
Domicilio – registered address of the employer
N⁰ INS. S.S. – social security number of the employer
Trabajador – employee
Categoria – the job or professional category based on the category mentioned in the applicable collective bargaining agreement
N⁰Matric – registration number
Antiguedad – date of entry into the company or the seniority level
D.N.I – employee National Identification Number
N⁰ Afiliacion S.S. – Social Security affiliation number of the employee
Tarifa – category range group code
Cod.ct – the type of contract
Seccion – work center
NRO – employee number
Period – settlement period i.e. the time period that this payslip refers to. It will include the start and end days e.g. January 1^st to January 31^st, 2023
Tot. dias – total days worked in that period
Precio – price per unit (this is multiplied by the days worked)

Earnings And Deductions

The first part of this is the earnings. This must include all of the salary that an employee has generated during this month, before the application of deductions. This total or sum is also referred to as the gross salary. It includes the following:

Salario base – The base salary is the total amount that any employee will receive for the days they work for the employer
Plus convenio – These are salary supplements or extra amount that an employee receives for their work. These can include bonuses, commissions, or seniority pay every 3 or 5 years etc.
Mejora absorbile – These are known as voluntary improvements. This is when an employee is offered some part of their salary in the form of in kind or flexible compensation. This amount must not exceed 30% of the gross salary in Spain and must be indicated in the payslip
Paga extra prorrateada – This amount represents all extra payments like Christmas bonuses or holiday pay that are prorated in the monthly salary and given gradually to the employee each month (prorate 13^th and 14^th month salaries)
Incentivos and asignacion – This is the amount paid as overtime to employees, in case it is applicable. And allowances for things like a residence, car, internet connection, insurance etc.

The next part of the payslip will list all the deductions that are made from your gross salary, to get to the figure of net salary (liquid total a percibir) that is actually paid out to you. The deductions include:

Dto. Cont. communes – These refer to the social security contributions that are mandatory for anyone who works in Spain. The deductions can be split into common contingencies (4.7%) which go towards things like health, pension and maternity or paternity leave. Unemployment contribution is 1.6% for contracts of fixed duration and 1.55% for indefinite contracts. And contributions for professional training are at 0.1%.
Retencion IRPF – This is the Impuesto sobre la renta de las personas fisicas or the personal income tax that is a direct tax levied by the government on the income of individuals. It is calculated according to income levels and the situation of each employee (e.g. marital status, number of dependents, type of contract), and the rates range from 19% to 45%

Value of products received in kind – If any employee is receiving products in kind (which appears in the earnings category), it is also included in the deductions section. With the flexible compensation option, an employee can decide to use some part of their salary in favor of some product or service offered by the company. That is why the value is also subtracted in the deductions section

Other deductions – If an employee has to pay back any amount to the company e.g. union dues, they will be mentioned here

Rates Used For Calculation

This section is a little technical and mentions the bases for social security contributions and joint collection concepts. It also includes taxable bases that are subject to tax withholdings and company contributions. To simplify, this will tell you how the base salary is determined which is used to calculate your Social Security contributions and income tax. The broken down contribution data can help you calculate how much you will receive for benefits in the future like retirement, unemployment or sick leave etc.

Common contingency contribution base BCCC – This is the base salary plus all salary supplements and apportionment of extra payments that are subject to contributions
Contribution base for professional contingencies and joint collection – This is calculated by adding the value of overtime hours to the BCCC as calculated above. This is the contributions base that is then used to calculate the percentage of the base of professional training, accidents at work, unemployment etc. The rate is determined by the government collective agreement for the profession relevant to the employee and the Social Security
Employer contribution – The company pays this for each of its employees
Unemployment – This is 5.5% of the employee’s BCCC if the worker has a fixed contract or 6.7% if the contract is temporary
Base subject to income tax – To calculate this amount, an employee’s total accrued is taken and any exempt amounts such as allowances and compensations are subtracted
Others – These include in vocational training, in salary guarantee fund, extra overtime quote and various bonuses and deductions

Conclusion

Simplifying a payslip in Spain can get quite difficult, especially as a foreigner who is not fluent in Spanish. The entire document is full of jargon and technicalities that you would much rather ignore. Maybe it is just easier not to focus too much. But if you are employed in the country, it is essential to take an interest in matters that will impact your finances and to get a hang of this document. This is so that you know exactly what you are being paid, where deductions are being made and where your contributions are going in the end. So make the most of this article by opening your own payslip while reading this so you can follow along. After all, your money, your decisions.