Spain vs Portugal
Hiring in Spain vs Portugal, compared dimension by dimension
Spain has deeper talent in established tech and enterprise roles, but employer contributions run 30 to 33% and Convenio Colectivo compliance adds layer on layer of complexity. Portugal's employer TSU is 23.75%, termination exposure is lower, and Lisbon and Porto now compete hard for engineering and fintech talent. Neither wins on every count.
1,000+ companies advised on international hiring
- ~7pp
- Portugal's standard employer TSU (23.75%) sits roughly 7 percentage points below Spain's base social security rate. On ten hires that is a material annual difference.
- 4,000+
- Active Convenios Colectivos in Spain, each setting its own pay floors, leave rules, and notice periods. Portugal runs one statute: the Codigo do Trabalho.
- 33 vs 18
- Days per year of service for Spain vs Portugal severance (unfair dismissal baseline). Portugal reformed its Codigo do Trabalho in 2023; Spain has not.
Spain or Portugal: which is the better Iberian market for your first international hire?
Spain has deeper talent in established tech and enterprise roles, but employer contributions run 30 to 33% and Convenio Colectivo compliance adds layer on layer of complexity. Portugal's employer TSU is 23.75%, termination exposure is lower, and Lisbon and Porto now compete hard for engineering and fintech talent. Neither wins on every count.
At a glance
Spain
Best for: companies that need large talent depth in established tech, enterprise sales, or senior finance, and whose candidate market is concentrated in Madrid or Barcelona
Portugal
Best for: teams prioritising lower employer cost, simpler regulatory compliance, or engineering and fintech talent in Lisbon and Porto
Shared by both: 40-hour statutory work week · EU member state, GDPR compliance · 22 working days minimum annual leave · EOR model covers both via Teamed
| Where it matters | Who leads | Why |
|---|---|---|
| Employer social contributions | Portugal | Portugal employer TSU: 23.75%. Spain: 30.3 to 33%. On equivalent headcount, Portugal's contribution bill is materially lower before salaries are benchmarked. |
| Termination and severance exposure | Portugal | Spain unfair dismissal: 33 days per year of service. Portugal post-2023 reform: 18 days for the first year, 12 days per year thereafter. Portugal carries lower statutory severance risk. |
| Regulatory complexity | Portugal | Portugal operates one statute (Codigo do Trabalho). Spain requires identifying the correct Convenio Colectivo from 4,000-plus active agreements per sector and province. Spain is harder to administer. |
| Talent depth for tech and finance roles | Draw | Madrid and Barcelona lead on enterprise tech and senior finance at scale. Lisbon and Porto are genuinely competitive for engineering and fintech. Role and seniority determine the better market. |
| Path to your own entity | Draw | Sociedad Limitada (SL) in Spain and Sociedade por Quotas (LDA) in Portugal follow similar setup timelines. Teamed models the crossover and sets up via GEMO in both markets. |
Spain on G2
Who Spain is for
This comparison is for rapidly growing companies with an international footprint that are deciding where to place their first or next Iberian hire. If your question is which EOR to use rather than which country, look at our Spain-specific EOR comparison. If you are ready to set up your own entity, the crossover calculator models the point where an SL in Spain or an LDA in Portugal beats EOR on cost.
Not the right fit if
- Already decided on Spain?. The best EOR in Spain comparison scores eight providers on one published rubric, including Convenio Colectivo depth, cost transparency, and the path to your own Sociedad Limitada.
- Ready for your own entity?. The crossover calculator models when your own entity beats EOR on cumulative cost. Teamed sets up entities in Spain and Portugal via Global Entity and Employment Operations (GEMO).
Find your pick in 20 seconds
| If you are… | Start with | Why |
|---|---|---|
| Senior enterprise tech or finance talent in a major European metro | Spain | Madrid and Barcelona have the deepest pools for enterprise-grade engineering, SaaS leadership, and senior finance. The employer cost is higher; the talent depth is real. |
| Engineering or fintech team where employer cost efficiency matters | Portugal | Lisbon and Porto have strong engineering talent, Portugal's employer TSU is 7 to 9 percentage points lower, and the salary benchmarks for equivalent roles are currently below Spain. |
| Multilingual European support or customer success | Either market, role-dependent | Both markets cover European time zones. Spain has broader language coverage; Portugal is stronger for English-first roles. |
| Hiring in both Spain and Portugal | Teamed handles both on one system | You get the same EOR fee, the same zero-markup FX policy, and real HR and legal experts for both markets without switching providers or re-onboarding. |
What is the Spain vs Portugal hiring decision?
An Employer of Record (EOR) in Spain or Portugal legally employs your people through its own entity or a vetted local partner, so you can hire compliantly before you have a Sociedad Limitada (SL) in Spain or a Sociedade por Quotas (LDA) in Portugal. The EOR issues the contract, runs payroll, remits employer-side social contributions, and carries the legal obligations of the local employer while you direct the work.
The headline difference is employer cost. Spain's social contributions run 30.3 to 33% of gross salary; Portugal's standard TSU sits at 23.75%. On ten equivalent hires that is a material annual saving. Spain has the deeper overall talent pool, particularly in established tech, enterprise sales, and senior finance. Portugal has grown Lisbon and Porto into competitive destinations for engineering, fintech, and customer-success teams. The right answer depends on the role, the salary benchmark, and the talent you can actually find.
Employer cost: what you actually pay on top of salary
Both countries pass statutory employer contributions through at cost. The gap is structural, not a provider choice. Spain's employer-side social security runs 30.3 to 33% of gross salary. Portugal's standard TSU is 23.75%, before work accident insurance of typically 1 to 2%. On a ten-person team at EUR 60,000 gross each, that gap is roughly EUR 42,000 to EUR 57,000 per year, before any difference in salary benchmarks. The cost model matters before you decide which market to open.
| Detail | Spain | Portugal |
|---|---|---|
| Employer social contributions | ~30.3 to 33% of gross salary | 23.75% standard TSU (plus ~1 to 2% work accident insurance) |
| Employee social contributions | ~6.35% of gross salary | 11% TSU (employee rate) |
| Statutory minimum wage | Set annually by Real Decreto; ask your EOR for the current rate at hire | RMMG (Retribuicao Minima Mensal Garantida), set annually; ask your EOR for the current rate |
| EOR fee (Teamed) | $599 USD or £479 GBP per employee per month, flat. FX absorbed at zero markup on the fee. | $599 USD or £479 GBP per employee per month, flat. Same fee applies in Portugal. |
Worked example
On a EUR 60,000 gross salary, Spain's employer contributions add roughly EUR 18,200 to EUR 19,800 per year. Portugal's TSU adds roughly EUR 14,250, with accident insurance adding EUR 600 to EUR 1,200. The employer cost gap per hire is approximately EUR 3,750 to EUR 5,350 per year. Across five hires at the same salary, that is EUR 18,750 to EUR 26,750 per year in additional employer cost to hire in Spain rather than Portugal.
Termination: the exit cost and the consultation rules
A contested exit in Spain carries a 33-day-per-year liability and may require Convenio-specific mediation procedures that add weeks to the timeline. Portugal reformed its Codigo do Trabalho in 2023, reducing compensation to 18 days for the first year and 12 days per year thereafter. Both countries have mandatory notice periods and protected categories. The EOR carries the legal-employer liability in each market, but you should know what that looks like before you hire.
| Detail | Spain | Portugal |
|---|---|---|
| Unfair dismissal compensation | 33 days' salary per year of service, capped at 24 monthly payments (despido improcedente) | 18 days of base pay (year 1), then 12 days per year thereafter, statutory cap applies |
| Objective dismissal / restructuring | 20 days' salary per year of service, capped at 12 monthly payments (despido objetivo), with mandatory consultation procedures | 18 days (year 1), 12 days per year thereafter, under the same 2023 reform formula |
| Works council consultation | Comite de Empresa consultation required for collective dismissals above certain headcount thresholds; Convenio may specify additional steps | Comissao de Trabalhadores has a consultative role in collective redundancies |
| Notice period | Set by the applicable Convenio Colectivo; the statutory minimum under the Estatuto is 15 days for most employees | Codigo do Trabalho: 15 days for under 1 year of service, 30 days for 1 to 5 years, 60 days for 5-plus years |
Why exit cost belongs in the country decision
The EOR carries the legal employer liability, including termination. But that liability still sits behind the fee and affects the total cost of the engagement. On a EUR 60,000 salary with five years of service, Spain's despido improcedente exposure is approximately EUR 27,500. Portugal's 2023-reform equivalent is approximately EUR 15,700. If you are hiring a role that may need to be restructured as your business evolves, factor the exit cost and the consultation timeline into the country choice.
Collective bargaining: Convenio Colectivo vs Codigo do Trabalho
Portugal operates under one statute, the Codigo do Trabalho, applied uniformly to all employees with company-level agreements (Acordos de Empresa) where negotiated. Spain's Estatuto de los Trabajadores requires every employment contract to comply with the applicable Convenio Colectivo, a sector and province-level collective bargaining agreement. Over 4,000 active Convenios are in force. Identifying the wrong Convenio exposes you to back-pay liability. Your EOR should identify the correct Convenio before the contract issues, not after a compliance question surfaces.
| Detail | Spain | Portugal |
|---|---|---|
| Framework | One national statute (Estatuto de los Trabajadores) plus the applicable Convenio Colectivo per sector and province | One national statute (Codigo do Trabalho) with optional company-level Acordos de Empresa |
| Agreements in force | 4,000-plus active Convenios Colectivos, covering pay floors, leave rules, notice periods, and working-time patterns | One statute; Acordos de Empresa apply only where a company has negotiated one |
| Minimum pay floor | The applicable Convenio sets a sector minimum above the national SMI. The EOR must check and apply the higher floor. | The RMMG (national minimum wage) is the floor; the Codigo sets entitlements above it uniformly. |
| Compliance complexity | High: correct Convenio identification requires sector and province knowledge; getting this wrong creates back-pay risk | Lower: one statute, uniform application, no sector-specific Convenio layer to identify |
What getting the Convenio wrong costs
A software engineer in Barcelona sits under a different Convenio than the same role in Seville. A senior accountant sits under a different Convenio than a customer success manager in the same city. If your EOR applies the wrong Convenio, the employee may have a back-pay claim for the difference between what they were paid and the Convenio minimum. Teamed identifies the applicable Convenio before the contract issues, as part of the standard onboarding for every Spain hire.
Talent and the hiring market: which city, which role
Madrid and Barcelona have established enterprise tech, SaaS, and finance talent pools that Lisbon and Porto cannot yet match at scale. Lisbon and Porto have built genuine depth in engineering, fintech, and software development, at salary benchmarks that are currently below the Spanish metros. Customer-success and multilingual support roles work well in both markets. The decision is role-specific, not country-specific.
| Detail | Spain | Portugal |
|---|---|---|
| Engineering and software talent | Deep pools in Madrid and Barcelona, plus growing hubs in Valencia and Bilbao; salary benchmarks higher than Portuguese equivalents | Lisbon and Porto have strong engineering talent, including a large graduate pipeline from Portuguese technical universities |
| Finance and fintech | Madrid is a major European financial centre; strong talent for CFO-track, accounting, and corporate finance roles | Lisbon is an emerging fintech hub, with a growing population of experienced fintech professionals |
| Customer success and support | Multilingual talent concentrated in Madrid and Barcelona; strong European-language coverage for EMEA support teams | Lisbon strong for English-language support; Porto competitive for mixed-language roles; both markets work for EMEA coverage |
| Salary benchmark (relative) | Higher in the major metros; benchmarks for senior roles in Madrid and Barcelona approach Western European levels | Lower than Spain for equivalent seniority in most categories; the employer cost saving and the salary saving can compound |
How City Relay chose Spain first
City Relay, a London property-management specialist, piloted their first remote hire in Spain in 2022. The rationale was European time-zone coverage and multilingual support. They then extended to the Philippines for overnight coverage. The Spain pilot ran on Teamed EOR: compliant contracts issued within 24 hours, no Spanish entity setup. The model proved so well that City Relay's global workforce grew 80% in 18 months. The right first market depends on the role; Spain was the right answer for a European-hours, multilingual support team.
Why the comparison matters
Behind every line item is a real person, in a real place.
The fee, the FX and the support model are not abstractions. They decide whether the person you hired in Barcelona or Rome is paid right, on time, by someone who knows their employment law. That is the comparison worth running.
What each stakeholder evaluates
| Criterion | Legal | Finance | People Ops | Security |
|---|---|---|---|---|
| Total employer cost per hire | Spain's Convenio Colectivo compliance means the minimum pay floor in the contract may sit above the national minimum wage. Ask your EOR to identify the applicable Convenio for each role before the offer is made, not after. In Portugal, the Codigo do Trabalho applies uniformly; there is no sector-specific minimum above the RMMG to identify separately. | On a EUR 60,000 gross salary, Spain's employer social contributions add roughly EUR 18,000 to EUR 20,000 per year; Portugal's add roughly EUR 14,250 plus work accident insurance. The contribution gap compounds across headcount. Model both countries before committing to a hiring plan. | The Convenio Colectivo in Spain can require higher leave entitlements, shorter working hours, or additional supplements above the statutory baseline. Build this into the total compensation model before you make an offer. Portugal's Codigo do Trabalho is the baseline; what you offer above it is your choice. | Both Spain and Portugal are EU member states. GDPR applies uniformly in both markets. Your data-processing agreement with the EOR operates under the same standard framework on both sides of the border. |
| Termination risk and timeline | Spain's despido improcedente carries a 33-day-per-year liability and Spanish employment courts have a well-documented record of finding dismissals improcedente. The applicable Convenio may add mandatory mediation or consultation steps before a termination can proceed. Portugal's 2023 reform reduced compensation to 18 days (first year) then 12 days per year. Both countries have protected categories and mandatory notice. Press your EOR on who handles a contested exit and whether that expertise is on your plan. | On a EUR 60,000 gross salary with five years of service, Spain's unfair dismissal exposure is approximately EUR 27,500. Portugal's 2023-reform equivalent is approximately EUR 15,700. The EOR carries the liability as the legal employer, but the liability still affects the total engagement cost. Factor the exit cost into the expected tenure model, particularly for senior roles. | A contested termination in Spain involving a Convenio-specific mediation procedure can take materially longer than a comparable exit in Portugal. If the role you are hiring is likely to require restructuring as the business evolves, Spain's longer process and higher severance cost should be part of the country decision. | Works council (Comite de Empresa) consultation in Spain applies above certain headcount thresholds and must be completed before collective dismissals can proceed. In Portugal, the Comissao de Trabalhadores has a consultative role in collective redundancies. Ask your EOR whether it handles these consultations directly or routes you to a local adviser at additional cost. |
| Talent access and role fit | There are no legal restrictions on the roles you can hire in either country for standard commercial functions. IP and invention-assignment clauses are enforceable in both markets. Ask your EOR whether its standard contract includes these clauses or whether they require a custom addendum. | Salary benchmarks differ: a senior engineer in Madrid commands a higher market rate than the same profile in Lisbon today, but the gap is narrowing. Check current salary data per role and city before committing to a country. The employer contribution saving in Portugal does not automatically translate to lower total compensation if the market rate for the role has converged. | Both markets reward quality benefits, flexibility, and a clearly documented working-abroad policy. Lisbon and Porto have attracted significant international tech talent in the past five years; the talent pool is genuinely competitive for engineering and data roles. Madrid and Barcelona offer the largest pools for senior commercial and finance hires. | Background checks and pre-employment verification follow similar rules in both markets under GDPR. Neither market imposes sector-specific security clearance requirements for standard commercial employment. |
How Teamed hires for you in Spain or Portugal
City Relay launched their first Spain hire through Teamed in 2022. Compliant contracts were in place within 24 hours. The operational process is the same in Portugal, and both markets run on one Teamed system with no re-onboarding if you move between them.
Step 1
Model the cost before you commit
Bring your role, your target salary range, and your candidate's likely location. Teamed models the employer cost in Spain and Portugal side by side: social contributions, accident insurance, any Convenio minimum that applies in Spain, statutory benefits, and the Teamed fee. You see the total before you make an offer.
Step 2
Identify the correct Convenio (Spain hires)
In Spain, Teamed's real HR and legal experts identify the applicable Convenio Colectivo for your employee's sector and province before the contract issues. The wrong Convenio creates back-pay exposure. Getting it right at the start is part of the Teamed standard for Spain.
Step 3
Issue the compliant contract
The employment contract issues under Teamed's local entity: a Teamed Spanish entity for Spain, a Teamed Portuguese entity or vetted in-country partner for Portugal. Your employee is legally employed in-market; you direct the day-to-day work.
Step 4
Run payroll and stay ahead of legal changes
Teamed runs monthly payroll, remits employer-side social security (TGSS in Spain, Seguranca Social in Portugal), and monitors statutory changes in both markets. When the law changes, you get a plain-English summary naming the affected employees and the impact, before the first affected payroll runs.
City Relay · London property management
+80% global workforce. Spain first, no entity setup.
- Global workforce growth in 18 months from the Spain pilot
- +80%
- Onboarding to compliant contract in Spain when needed
- < 24 hrs
- Local compliance across Spain and all subsequent markets
- 100%
- Teamed partnership start, Spain as the first market piloted
- 2022
Challenge
City Relay, an award-winning London short-term-rental specialist, needed to build a remote support team. The firm had no in-house capacity to learn Spanish employment law, no appetite for entity setup in Spain, and needed a faster onboarding cycle than their rental market's seasonality allowed. Standard international hiring timelines were not workable.
Approach
City Relay engaged Teamed in 2022, starting with two hires in Spain as the pilot. Teamed's Spanish entity became the legal employer; City Relay directed the day-to-day work. Same-day onboarding became the operational baseline. The model later extended to the Philippines on the same Teamed structure, with a dedicated in-country specialist for Philippine labour law.
Result
City Relay grew 80% in global workforce within 18 months of the Spain pilot. Onboarding compresses to under 24 hours when the seasonality of the rental market demands it. 25% of total headcount is now remote-international, with a firm internal target of 30%. City Relay now recommends the EOR model to peer property-management operators.
Interactive tool
Model the employer cost in Spain vs Portugal
The 7-to-9 percentage point gap in employer social contributions translates directly to the total cost per hire. Use the crossover calculator to model when your own Sociedad Limitada or Sociedade por Quotas beats EOR on cumulative cost in each market.
Decision checklist
- Choose Spain if you need talent depth in established tech, enterprise sales, or senior finance. Madrid and Barcelona have the largest pools for these roles on the Iberian Peninsula, and the employer cost is higher but the talent access is real.
- Choose Portugal if employer cost efficiency matters alongside talent quality. Portugal's 23.75% employer TSU is 7 to 9 percentage points lower than Spain's contribution rate, and Lisbon and Porto have built genuinely competitive engineering and fintech pools.
- Choose Portugal if regulatory simplicity is a priority for your people-ops team. The Codigo do Trabalho is one statute; Spain's obligation to identify the correct Convenio from 4,000-plus active agreements is a real compliance surface, even with a good EOR handling it.
- Consider both markets if your role works in either location. Run a salary benchmark per city, model the employer cost side by side, and let the combined total cost and talent availability guide the decision. Teamed handles both markets on one system.
- Use Teamed in either market if you want a real HR or legal expert to identify the applicable Convenio in Spain, or to model the Portugal probation and notice terms, before your first contract issues, not after a compliance question surfaces six months in.
Honest take
When Spain is the better choice
- Choose Spain if the talent you need is concentrated in Madrid or Barcelona. Enterprise-grade engineers, senior finance professionals, and SaaS leadership run deeper in the Spanish metros than anywhere in Portugal today. The employer cost is higher; the depth is real.
- Choose Spain if your team requires native Spanish-language fluency at scale. Portugal's talent market is English-comfortable, but a Spanish-language customer or sales team belongs in Spain.
- Choose Spain if your business model depends on proximity to a large domestic European consumer market or established supply chains. Spain's economy is larger, and Madrid offers deeper commercial infrastructure for businesses that need physical European scale alongside the remote team.
Portugal leads on employer cost, termination exposure, and regulatory simplicity. Spain leads on talent depth for specific roles and its size as a domestic market. Both are strong hiring markets when run through a compliant EOR that knows the rules in each.
Questions to ask any EOR before you sign
- 1What deposit or pre-funding do you require, and which setup, offboarding, minimum-term, termination or admin fees are in the contract? Read it line by line before you sign.
- 2In Spain: will you identify the applicable Convenio Colectivo for my employee's sector and province before the contract issues?
- 3In each country, are you employing through your own entity or a vetted local partner, and which applies to my specific hire?
- 4Who handles a contested termination in Spain if it requires Convenio-specific mediation, and is that expertise on my plan?
- 5Can you model the total employer cost in Spain and Portugal side by side before I commit to a market?
- 6When my headcount in Spain or Portugal reaches the point where my own entity is the better structure, will you tell me and help me make the move?
- 7Will the employment contract include my employee's actual job title and role description, compliant with the applicable Convenio in Spain?
- 8If a law changes in either market, how will I find out, and will I hear about it before or after the affected payroll runs?
Frequently asked questions
Is Portugal less expensive for employers than Spain?
On employer social contributions, yes. Portugal's standard employer TSU is 23.75%; Spain's employer-side contributions run 30.3 to 33%. On a EUR 60,000 gross salary, the annual gap is roughly EUR 3,750 to EUR 5,350 per hire in employer contributions alone. Portugal also requires work accident insurance of typically 1 to 2% of salary, which applies in Spain too. Salary benchmarks differ by role and city, so the total employer cost comparison needs both the contribution rate and the going market rate for the specific hire.How do termination rules differ between Spain and Portugal?
Spain's unfair dismissal (despido improcedente) triggers 33 days' salary per year of service, capped at 24 monthly payments. Portugal reformed its Codigo do Trabalho in 2023: compensation for objective or collective dismissal is now 18 days of base pay for the first year and 12 days per year thereafter. Both countries have protected categories, mandatory notice periods, and consultation requirements for collective dismissals. The EOR is the legal employer in each market and carries this liability, but the liability still sits behind the fee and affects the total cost of the engagement.What is the Convenio Colectivo and why does it matter?
A Convenio Colectivo is a sector and province-level collective bargaining agreement in Spain, required under the Estatuto de los Trabajadores. Over 4,000 active Convenios are in force, each setting its own minimum pay scales, working hours, leave entitlements, and notice periods above the statutory baseline. Your employment contract in Spain must comply with the applicable Convenio for your employee's role and location. Applying the wrong Convenio creates back-pay exposure. Portugal runs one statute (the Codigo do Trabalho) with no equivalent sector-level agreement requirement for most standard employment.Can I hire in both Spain and Portugal on one EOR?
Yes. Teamed covers both markets on one system with the same flat fee ($599 USD or £479 GBP per employee per month) and the same zero FX markup policy. You see the employer cost for each hire, in each country, on one invoice. If a hire in Spain triggers Convenio Colectivo compliance questions and a hire in Portugal triggers probation or notice questions, real HR and legal experts at Teamed handle both, on the same plan, without switching providers or re-onboarding your people-ops team.When does setting up my own entity in Spain or Portugal beat EOR?
The crossover point is when the cumulative per-employee EOR fee exceeds the fixed cost of a registered entity, local accounting, statutory filings, and any required local director in that country. The exact threshold is country-specific and salary-specific. Teamed models the crossover per country via the crossover calculator, helps you set up a Sociedad Limitada (SL) in Spain or a Sociedade por Quotas (LDA) in Portugal through Global Entity and Employment Operations (GEMO), and can keep managing the entity for you afterwards, so the advice is not tied to keeping you on EOR indefinitely.
Common questions
Spain vs Portugal for hiring a software engineer in 2026: which is better?
Both markets work, and the right answer depends on the seniority and the salary. Lisbon and Porto have built strong engineering pools with university pipelines from Instituto Superior Tecnico and Universidade do Porto; salaries are currently below Madrid and Barcelona for equivalent seniority. Spain's employer contributions run 30.3 to 33% of gross salary; Portugal's employer TSU is 23.75%, plus work accident insurance. On a senior engineer at EUR 70,000 gross, the employer cost gap is roughly EUR 4,500 to EUR 6,500 per year in social contributions. Portugal wins on employer cost; Spain wins on depth for very senior roles. Teamed handles both markets on one system with the same fee and zero FX markup.What are the main employment law differences between Spain and Portugal?
The two biggest practical differences are collective bargaining and termination. Spain requires every employment contract to comply with the applicable Convenio Colectivo, a sector and province-level agreement (4,000-plus active); Portugal uses one statute (Codigo do Trabalho) applied uniformly. On termination, Spain's unfair dismissal triggers 33 days per year of service; Portugal's 2023 reform set compensation at 18 days for the first year and 12 days per year thereafter. Employer social contributions are also different: roughly 30 to 33% in Spain, 23.75% standard TSU in Portugal. Both countries are EU member states with GDPR-compliant employment frameworks and 40-hour statutory work weeks.
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