---
title: "Spain EOR vs Entity 2026 | Crossover + When to Switch"
description: "Spain EOR vs own entity. Employer social security 31.65%. SL setup EUR 5,000 to 20,000. Crossover around 6 to 9 employees. Full decision guide."
canonical: https://www.teamed.global/country-hiring-guides/spain/eor-vs-entity
---

Spain · EOR vs entity child

Served by Teamed-owned entity: Teamed Iberia SL, Barcelona

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

Spain's employer social security rate sits at 31.65%, bundling pension, unemployment, and training levies into one cost on both sides of the comparison. At low headcount, the EOR fee beats the entity overhead by a wide margin. The crossover typically lands around 6 to 9 employees, but Spain adds a complication the maths alone does not show: the Sociedad Limitada requires a minimum share capital of EUR 3,000 and a notarised deed before you can open a bank account.

Last reviewed 13 June 2026 · Spain guide

![A wide view across Barcelona's Eixample district rooftops toward the Sagrada Familia.](/images/country-guides/spain-eor-vs-entity.webp)

Illustration · Barcelona, Spain

Answer.cite this

EOR is faster and cheaper at low headcount in Spain. Setting up a Sociedad Limitada (SL) typically takes 8 to 12 weeks from decision to first payroll. Formation typically costs EUR 5,000 to 20,000. Running the entity costs roughly EUR 3,500 to 5,500 per month.

Those are typical ranges, not law figures. Entity costs vary by share structure, notary fees, outsourcing model, and whether you use a gestor or a full employment law firm. The crossover point typically lands around 6 to 9 employees at average tech salaries.

Employer social security is 31.65% on both sides of the comparison. This bundles pension, unemployment, and training contributions. Spain also requires two extraordinary salary payments per year. Those pagas extraordinarias appear on both sides.

![Hands reviewing a Spanish employment contract at a sunlit desk in Madrid.](/images/country-guides/spain-eor-vs-entity-polaroid-1.webp)

Sign here

## The crossover maths

EOR cost scales with headcount. One fee per employee per month. Entity cost has a fixed overhead. That fixed line and the EOR line cross at around 6 to 9 employees for average Spanish tech salaries.

Teamed charges from $599 per employee per month. At a common EUR rate that works out to roughly EUR 549. Your own SL typically carries a fixed monthly overhead of EUR 3,500 to 5,500 for payroll, bookkeeping, filings, gestor fees, and HR admin.

The calculation below uses EUR 549 as the illustrative EUR equivalent of the Teamed fee. This is illustrative, not a fixed EUR price. The actual EUR amount depends on the exchange rate at the time of invoice. Teamed charges from $599 USD with zero FX mark-up.

All entity cost figures in this table 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 crossover compresses faster at higher salaries. Employer social security at 31.65% 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 the crossover headcount. [Run the Crossover Calculator with your own headcount and salary band.](/tools/crossover-calculator/spain)

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 the crossover headcount The crossover is where EOR monthly cost equals entity monthly overhead. For most Spain tech salary bands, this is typically around 6 to 9 employees. Use the Crossover Calculator for your own numbers.
4. Factor in non-financial triggers The maths gives you a headcount threshold. 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 8 to 12 weeks for SL formation before the first payroll on your own entity. Factor in 4 to 8 weeks extra for the bank account after the notario deed is signed. Start the GEMO process while EOR continues running.

## Spain entity setup: what it actually costs

Forming a Spanish Sociedad Limitada typically costs between EUR 5,000 and EUR 20,000 all-in. The minimum share capital is EUR 3,000. That is a real cash outlay, not a fee.

Allow roughly 8 to 12 weeks from the incorporation decision to your first payroll run. The notarised deed and bank account are the two gating steps.

These are typical ranges. They are not law figures. There is no law that sets what an SL costs to form beyond the EUR 3,000 minimum share capital. 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.

| Cost item | Typical range | One-off or recurring |
| --- | --- | --- |
| Minimum share capital (EUR 3,000) | EUR 3,000 (mandatory outlay) | One-off (working capital) |
| Notario deed (escritura de constitucion) | EUR 400 to 800 | One-off |
| Mercantile Register filing | EUR 100 to 300 | One-off |
| Gestor or corporate services setup | EUR 800 to 3,000 | One-off |
| TGSS (social security) employer registration | EUR 0 direct (admin time) | One-off |
| Agencia Tributaria NIF and VAT registration | EUR 0 direct (admin time) | One-off |
| Business bank account | EUR 0 to 500 (varies) | One-off plus monthly fees |
| Employment contracts and HR policies | EUR 1,500 to 5,000 | One-off |
| Collective agreement review (convenio colectivo) | EUR 500 to 2,000 | One-off |
| Insurance (employer civil liability, D&O) | EUR 600 to 3,000 per year | Recurring |
| **Realistic total setup cost** | **EUR 5,000 to 20,000** | **Mostly one-off** |

### The notario and the bank account

Unlike the UK, Spain requires a notarised deed to incorporate. This adds a week to the process and cannot be skipped. The bank account then requires the signed notarial deed before it will open. Foreign-parented companies should allow 4 to 8 weeks for a business account after the deed is signed. This typically turns a 4-week incorporation into a 10 to 12-week wait before the first payroll. Plan for it before you set the first hire start date.

## Spain entity ongoing cost: typically EUR 3,500 to 5,500 per month

Running a small SL in Spain typically costs EUR 3,500 to 5,500 per month. That covers a gestor, outsourced payroll, Modelo filings, social security declarations, and basic HR admin.

Below 5 employees, this fixed overhead makes the per-head cost very high. Above 12 employees the overhead amortises and the entity starts to look cheaper.

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.

| Monthly cost item | Typical range | What it covers |
| --- | --- | --- |
| Gestor / bookkeeping and monthly accounts | EUR 600 to 1,200 | Cash reconciliation, Modelo 303 VAT, monthly P&L |
| Payroll service (1 to 15 employees) | EUR 300 to 800 | Social security declarations, IRPF withholding, payslips, 14 payments/year |
| Annual accounts and Impuesto de Sociedades (amortised) | EUR 200 to 600 | Around EUR 2,500 to 7,000 per year divided by 12 |
| Mercantile Register annual filing (amortised) | EUR 20 to 60 | Around EUR 200 to 700 per year divided by 12 |
| Social security and SEPE employer compliance | EUR 100 to 300 | Monthly TC1 and TC2 declarations, new-hire notifications |
| Employment and convenio colectivo advisory | EUR 300 to 1,000 | Contract reviews, disciplinary procedure, HR queries |
| Spain People Ops and first-point HR | EUR 800 to 1,500 | Onboarding, queries, leave admin |
| Software subscriptions (HRIS, payroll, accounting) | EUR 100 to 400 | Per-user SaaS |
| Insurance amortised | EUR 50 to 200 | D&O plus civil liability premiums divided by 12 |
| **Total ongoing monthly** | **EUR 3,500 to 5,500** | **1 to 15 employee SL** |

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.

## The cost nobody quotes: director liability

Spanish SL administrators (administradores) carry personal legal duties under the Ley de Sociedades de Capital. These duties cannot be delegated. Late filings and unpaid social security can become personal debts.

EOR clients do not carry these duties. Teamed holds them as the legal employer and registered administrator.

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)](https://www.boe.es/buscar/act.php?id=BOE-A-2010-10544), 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.

## When you should stay on EOR

Below 6 employees, with project-based hires, or while you are still testing the Spanish market, the EOR is the right answer. The crossover is a maths threshold. It is not a strategic verdict.

Reversibility matters. The SL formation process takes 8 to 12 weeks and involves notarised deeds that cannot be undone cheaply. EOR is not sticky in that way. If the Spain bet does not pan out, winding down an EOR relationship is straightforward.

- **Under 6 Spain employees at average salaries**: 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 the EUR 3,000 minimum 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.

## When you should switch to your own entity

Above 9 employees consistently, with a multi-year Spain plan, or with a need for Spanish entity substance for tax treaty or enterprise customer purposes, your own SL beats EOR on cost.

The single biggest structural pull in Spain is not share options (the SL structure has limited options for this) but VAT recovery and Impuesto de Sociedades consolidation. Those require your own registered entity.

- **Sustained headcount above 9 Spain employees** at average salaries: 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.

## How Teamed's Graduation Model handles the transition

Teamed graduates customers from EOR to their own entity on the same platform. Same Spain specialist. Same employment contracts, novated to the new entity. No break in employee tenure or benefits.

Most providers treat graduation as a re-onboarding event. Employees re-sign, sometimes lose continuous service, and lose accrued leave and severance entitlement. Teamed treats it as a stage of the employment lifecycle.

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](/entity-management), typically 8 to 12 weeks, 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.

## How does Teamed handle Spain employment for you?

Teamed becomes your legal [employer of record](/lp/employer-of-record) in Spain for [**from $599 per employee per month**](/pricing), with **zero FX mark-up** in any currency.

Payroll, benefits, and the full Spain employment law stack run on **one platform**.

**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, itemised** on every invoice. You see the social security line at 31.65%, the leave accrual for 22 days working days, and the two extraordinary salary payment obligations each year. Nothing is hidden inside the management fee.

EOR payroll, contractor onboarding, and entity setup all live on **one platform**. Run the [Crossover Calculator](https://www.teamed.global/tools/crossover-calculator) to see the month the model flips. Start from [the Spain hiring overview](/country-hiring-guides/spain). Key sources: [Estatuto de los Trabajadores (BOE)](https://www.boe.es/buscar/act.php?id=BOE-A-2015-11430) and [Agencia Tributaria](https://www.agenciatributaria.gob.es/).

## Frequently asked questions

At what headcount does an EOR stop being cheaper than a Spain entity?

The crossover typically lands at around 6 to 9 Spain employees at average tech salaries. Below that, the EOR fee (from $599 per employee per month) is cheaper than the typical entity overhead of EUR 3,500 to 5,500 per month. Above it, the entity overhead amortises and per-employee cost falls below the EOR fee. Use the Crossover Calculator to run your own salary band.

How much does it cost to set up a Spanish Sociedad Limitada?

Typically EUR 5,000 to 20,000 all-in. The minimum share capital is EUR 3,000 and this is a real cash outlay, not a fee. On top of that come notario fees (EUR 400 to 800), Mercantile Register filing, gestor setup, employment contracts, and a bank account. The range varies with how much you outsource and how much corporate substance your structure needs.

How long does it take to set up a Spain entity and run the first payroll?

Typically 8 to 12 weeks from the incorporation decision to first payroll. The notarised deed (escritura de constitucion) must be signed before the bank account can be opened. Foreign-parented companies should allow 4 to 8 weeks for a business account to open after the deed is submitted. Start the GEMO process before you reach the crossover headcount, not after.

Does my continuous service date transfer if I move from EOR to my own Spain entity?

Yes, when Teamed handles the transition through the Graduation Model. The novation mechanic transfers the employment contract to your new SL on a single date, with the original antiguüedad (continuous service date) intact. This matters in Spain because the severance calculation for an objective dismissal is based on years of service. A novation that resets the service date would reduce severance entitlement, which Teamed's process avoids.

What employer social security rate applies on both sides of the comparison?

Employer social security in Spain is 31.65% of the salary base for a standard indefinido (permanent) contract. This bundles contributions for pension, unemployment, FOGASA, vocational training, and the MEI intergenerational equity mechanism. The rate applies whether you employ via EOR or your own entity. It is the same law cost on both sides.

Teamed Legal Operations

The crossover is not the moment to start planning. By the time the maths tips to entity in Spain, you want the notario appointment already booked. The deed signing, Mercantile Register filing, and bank account opening stack sequentially. Decisions made at the crossover point are decisions that delay the first payroll by three months.

A note from Tom Price-Daniel

EOR wins up to around 6 to 9 employees in Spain.  
Past that, a Sociedad Limitada costs EUR 5,000 to 20,000 to set up, including the EUR 3,000 minimum share capital. The notario and the bank account add 8 to 12 weeks.  
When the maths flips, we tell you and move you across. That is the only honest version of this.

Tom Price-Daniel · Co-founder, Teamed

## Related Spain guides

- [Hiring in Spain, overview](/country-hiring-guides/spain)parent
- [Spain employer cost breakdown](/country-hiring-guides/spain/cost-breakdown)sibling
- [Spain tax and payroll guide](/country-hiring-guides/spain/tax-and-payroll)sibling
- [Spain termination and severance](/country-hiring-guides/spain/termination-and-severance)sibling
- [Employer of Record overview](/lp/employer-of-record)core
- The Graduation Modelcore
- [Entity Management (GEMO)](/entity-management)core
- [Crossover Calculator](https://www.teamed.global/tools/crossover-calculator/spain)tool
- [Talk to an expert](https://www.teamed.global/contact)CTA

A note on this page.

This is a guide, not legal, tax or accounting advice. Rules change and vary by jurisdiction. Verify current requirements with the Agencia Tributaria, TGSS, and Ministerio de Trabajo before relying on any specific framework. Entity setup cost ranges and ongoing cost ranges in this guide are typical market figures based on professional services pricing in Spain. They are illustrative only and not law figures. The employer social security rate and annual leave entitlement cited are verified figures from the Estatuto de los Trabajadores and the Orden de Cotizaciones 2026.