When do you graduate from an EOR to your own Spain entity?

All entity cost figures on this page are typical ranges. They cover a gestor or outsourced payroll bureau, bookkeeping, Modelo filings, social security declarations, and first-point HR for a small SL. They are illustrative, not law figures. Actual costs vary with the detail of your setup and the benefits programme you run. *The about-even row is illustrative, not a fixed crossover headcount: it moves with your entity quote, the per-employee EOR fee, and how fast you are growing.

The crossover compresses as the entity's fixed overhead spreads over more people. Employer social security at 32.15% applies to the full salary base and is the same on both sides. At EUR 80,000 salaries the social security cost line is large on both sides but does not change the crossover ratio. What changes is how quickly the per-head EOR fee line climbs past the entity fixed overhead.

Spain also requires two extraordinary salary payments (pagas extraordinarias) each year. These affect total cost but apply on both sides of the comparison, so they do not shift where your crossover point falls. Run the Crossover Calculator with your own headcount.

1. Calculate the EOR cost

   Multiply the Teamed fee (from $599 USD) by your planned Spain headcount. This is the fixed variable cost. It grows linearly as you hire.

2. Estimate the entity fixed overhead

   Typically EUR 3,500 to 5,500 per month for a small SL. This covers a gestor, payroll bureau, Modelo filings, social security declarations, and first-point HR. This cost does not grow much until headcount exceeds 15.

3. Find your crossover point

   The crossover is where EOR monthly cost equals entity monthly overhead. There is no fixed number: it moves with the per-employee EOR fee, your entity quote, and how fast you are growing. Use the Crossover Calculator for your own numbers.

4. Factor in non-financial triggers

   The maths gives you a planning point, not a fixed line. VAT recovery, entity substance for tax treaties, works council thresholds, and market-validation reversibility are separate questions that may override the cost crossover in either direction.

5. Plan the graduation date

   Allow time to form the SL and then to reach a first payroll on your own entity, shown as market estimates in the setup cost section. The bank account, which only runs normally once the company is registered, usually decides the date. Start the GEMO process while EOR continues running.

These are market ranges, not law figures. The notario and the Mercantile Register charge from public schedules, and the law sets a minimum share capital of EUR 1. While capital stays below the minimum that applied before 2022, part of each year's profit goes to a legal reserve and the shareholders answer for the gap if the company is wound up short of money. The range reflects real market rates for professional services (notario, gestor, employment law firm) in Spain. It varies with how much substance your structure needs.

The notario and the bank account

Unlike the UK, Spain requires a deed signed before a notario to incorporate, and it cannot be skipped. The bank usually opens the company's account before the deed so the share capital can be paid in, but only lets it run normally once the company is registered and has its final tax number. For a foreign-parented company, the bank's checks are usually the slowest single step, which is why the first payroll comes some weeks after registration, as the market estimates below show. Plan for it before you set the first hire start date.

These figures are typical market ranges for a small SL with 1 to 15 employees. They are illustrative. They are not law figures. Actual costs depend on whether you use a gestor, a full outsourced HR firm, or build in-house capacity, and the scale of your payroll and the applicable convenio colectivo.

Above 15 employees, dedicated Spain HR capacity and an in-house finance function typically become necessary. The cost band widens at that point. Convenio colectivo obligations also grow at higher headcounts, particularly around works council thresholds at 6, 11, and 50 employees.

Most cost comparisons skip the administrator-liability dimension because it is hard to put a number on. It is worth naming before you decide.

Personal administrator duties

Under the Ley de Sociedades de Capital (Real Decreto Legislativo 1/2010), every SL administrator must act with the diligence of an ordered businessperson, observe a duty of loyalty, disclose conflicts of interest, and avoid actions that damage the company or its creditors. An administrator who allows social security contributions to fall into arrears can be held personally liable for the unpaid balance under the LGSS solidarity-liability rules. These are personal duties. They cannot be outsourced.

The compliance treadmill

• Social security declarations: TC1 and TC2 filed monthly. Arrears attract penalties and interest, and the Agencia Tributaria or TGSS can pursue the administrator directly.
• IRPF withholding returns (Modelo 111): quarterly within 20 days of quarter-end. Late filing triggers an automatic penalty.
• Annual accounts filing: within 6 months of year-end. Late filing triggers Mercantile Register penalties and blocks new public deed signings until cleared.
• Impuesto de Sociedades (corporate tax return): within 25 days after 6 months from year-end. Late filing attracts penalties and interest.
• Collective agreement compliance: the applicable convenio colectivo creates ongoing obligations on pay rates, working time, and benefits. A non-compliant SL faces fines from the Labour Inspectorate (ITSS).
• Works council information rights: at 6 employees a works committee can be elected. At 50 employees a full works council is mandatory. Both trigger information and consultation duties that carry personal liability for the administrator if ignored.

Each obligation is individually manageable. Stacked across a year with a small team and a first-time administrator, they consume real management attention and carry real penalty risk. An EOR carries all of these on its own entity.

• While your Spain team is small: EOR is cheaper every month. The entity overhead of EUR 3,500 to 5,500 has nothing to amortise against at this scale.
• Market validation phase: you are hiring 1 or 2 people to test commercial fit in Barcelona or Madrid. Entity setup commits share capital, notary fees, and management attention before you know whether the Spain market will deliver.
• Project-based hires: 6 to 12 month engagements where the formation cost will not amortise before the project ends. Spain also has a 15-day notice period for objective dismissal, so exit is straightforward via EOR.
• No convenio colectivo expertise in-house yet: Spain's collective agreements are sector-specific and legally binding. Running your own SL without local expertise on the applicable convenio creates real compliance risk. EOR manages this for you.
• Acquired team you may divest: post-acquisition holding patterns where adding an SL creates wind-up costs and potential TGSS liability transfer issues later.

• Sustained headcount past your crossover point: the entity overhead amortises across enough people that per-head cost falls below the EOR fee.
• Spanish entity substance required: some cross-border tax structures need actual Spanish substance (employees, address, registered SL) in your own entity. EOR employment does not count as your substance for corporate tax treaty purposes.
• Works council threshold approaching: at 50 employees a works council is mandatory. If you plan to reach that headcount, owning the entity gives you direct control of the information and consultation process. An EOR managing the process on your behalf creates an indirect principal-agent dynamic that is harder to navigate at that scale.
• Enterprise customer or investor expectation: Spanish enterprise customers and public sector procurement occasionally require contracting with a Spanish-incorporated entity. If that is relevant to your sales motion, early incorporation is worth the setup cost.
• VAT registration and recovery: a registered SL can reclaim IVA (Spanish VAT) on business costs. An EOR arrangement does not give you that recovery mechanism directly.

The technical mechanic is contract novation: the employment contract transfers from the Teamed entity to your new SL on a specified date. All terms carry across. Salary, the applicable convenio colectivo benefits, leave entitlement, and continuous service date all remain unchanged. The employee sees a different employer name on their payslip. Nothing else changes.

What we do operationally:

• Stand up your Spain SL through GEMO, while EOR continues running in parallel.
• Handle the notario deed, Mercantile Register filing, and TGSS employer registration.
• Open the entity payroll scheme and SEPE registrations.
• Novate every active employment contract on a single effective date, preserving the antiguüedad (continuous service date) which is the basis for Spain's severance formula.
• Migrate ongoing benefits and convenio colectivo compliance without any lapse.
• File final EOR-period social security declarations and open new declarations on the entity from the novation date.
• Provide the same People Ops specialist as the post-graduation primary contact.

Preserving the antigüedad date is critical in Spain. The severance calculation for an objective dismissal uses years of service. A novation that resets the service date would reduce the employee's statutory severance entitlement. Teamed's novation mechanic never does this.

Real HR and legal experts handle your Spain hires from the first offer letter through every Modelo filing and year-end summary. An actual person, not a chatbot or a pooled queue. There is no setup fee and no exit fee. Every employer cost passes through at cost. Nothing is hidden inside the management fee.

EOR payroll, contractor onboarding, and entity setup all live on one platform. Run the Crossover Calculator to see the month the model flips. Start from the Spain hiring overview. Key sources: Estatuto de los Trabajadores (BOE) and Agencia Tributaria.