- 1Spain: An attractive country for investment
- 2Setting up a business in Spain
- 3 Tax System
- 4 Investment aid and incentives in Spain
- 5 Labor and social security regulations
- 6 Intellectual property law
- 7Legal framework and tax implications of e-commerce in Spain
- AI Annex I Company and Commercial Law
- AIIAnnex II The Spanish financial system
- AIIIAnnex IIIAccounting and audit issues
- State incentives for training and employment
- State incentives for specific industries
- Incentives for investments in certain regions
- Aid for innovative SMEs
- Preferred financing of the Official Credit Institute (Instituto de Crédito Oficial or ICO)
- Internationalization incentives
- EU aid and incentives
2. State incentives for training and employment
2.2. Employment incentives
The Spanish Central Government offers an extensive catalog of aid, consisting mainly of reductions in social security contributions, aimed at promoting new stable or indefinite jobs (especially for unemployed persons included in groups such as women in general, young people aged 16-30, the long-term unemployed, unemployed persons over the age of 45 and persons with disabilities).
Furthermore, on an exceptional basis, certain reductions in social security contributions are instrumented for temporary contracts executed with workers with disabilities or with socially-excluded individuals, (provided that in both cases they are unemployed and registered as job seekers at the Employment Office), as well as with persons who provide evidence of having been a victim of gender-based violence.
Where the indefinite-term or temporary contract is part-time, the incentive will be the result of applying to the incentives stipulated for each case, a percentage equal to the percentage of the working day stipulated in the contract, increased by 30% (the result of which may in no case exceed 100% of the total amount, except in connection with incentives for hiring persons with disabilities through special employment centers).
The catalog of aid for the formalization of contracts, the basic parameters of which were just described above, is very extensive, as it varies according to the types of existing contracts and the specific features of each of them. Most of these incentives are set forth in Law 43/2006, on improved growth and employment, as well as in Law 3/2012, on urgent measures to reform the job market, which, among other objectives, are aimed at rationalizing the system of incentives for hiring under indefinite-term contracts, with a view to correcting some of the inefficiencies detected, in practice, in recent years.
More information on the aid and reductions envisaged for each type of contract may be found at the website of the State Public Employment Service.
The following is a summary of the main reductions, currently applicable, for the hiring of workers:
A. Incentives for hiring under indefinite-term contracts (pursuant to the provisions of Laws 18/2014, 43/2006 and 3/2012 and to Royal Decree 8/2019)
|Groups||Description||Annual Amount (€)||Duration|
|Long-term unemployed||Persons who have been unemployed and registered at the employment office for at least 12 months in the 18 months prior to being hired (article 8 of Royal Decree-Law 8/2019 of March 8, 2019 on urgent social protection measures and to combat job insecurity in relation to working hours) ***.|
|Proportional to the working hours agreed upon in the contract.|
|Special situations||Socially-excluded workers (art. 2.5 Law 43/2006).|
|Socially-excluded workers who have finalized an employment contract with an employee insertion company during the preceding 12 months, and have not worked for another employer thereafter and are hired by an employer that is not an insertion company or special employment center (art. 2.5 Law 43/2005).||
Year 1: 1,650
Year 2: 600
Year 3: 600
Year 4: 600
|Victims of domestic violence (art. 2.4 Law 43/2006)****.|
|Victims of gender-based violence (art. 2.4 Law 43/2005)****.|
|Victims of terrorism (art. 2.4 bis Law 43/2006)****.|
|Victims of human trafficking (art. 2.4 ter of Law 43/2006)****.|
|Persons with disabilities||In general (art. 2.2.1 Law 43/2006).||Men < 45 years||Women < 45 years||Men and women aged over 45||Throughout the term of the contract.|
|In case of severe disability (art. 2.2.2 Ley 43/2006).||5,100||5,950||6,300|
|Conversion to indefinite||Conversion of temporary contracts for job creation executed with persons with disabilities, or of training contracts executed with disabled workers into indefinite-term contracts (art. 2.2.1 Law 43/2006).||Men < 45 years||Women < 45 years||Men and women aged over 45||Throughout the term of the contract.|
|Conversions of work-experience, handover and replacement due to retirement contracts into indefinite-term contracts (art. 7 Law 3/2012) *****.||Men||Women||3 years|
|Conversion of vocational training and apprenticeship contracts, regardless of the date of execution, into indefinite-term contracts (art. 3.2 Law 3/2012) ******.||1,500||1,800|
|Conversion of contracts executed with socially-excluded workers into indefinite-term contracts (art. 2.6 Law 43/2006).|
|Conversion of contracts executed with Socially-excluded workers who have finalized an employment contract with an employee insertion company during the preceding 12 months, and have not worked for another employer thereafter and are hired by an employer that is not an insertion company or special employment center into indefinite-term contracts (art. 2.6 Law 43/2006).||
Year 1: 1,650
Year 2: 600
Year 3: 600
Year 4: 600
|Conversion of contracts executed with victims of domestic violence into indefinite-term contracts (art. 2.6 Law 43/2006).||
|Conversion of contracts executed with victims of gender-based violence into indefinite-term contracts (art. 2.6 Law 43/2006).||
|Conversion of contracts executed with victims of terrorism into indefinite-term contracts (art. 2.6 Law 43/2006).||
- For this incentive to be applicable, the company must keep the worker hired in employment for at least three years as from the start of the employment relationship. Similarly, the level of employment at the company reached with the contract entered into must be maintained for at least two years as from the date of its formalization. If these obligations are not met, the amount of the incentive must be refunded.
The above requirements regarding the maintaining of employment levels are not considered breached in cases of termination of the employment contract on objective grounds or due to a disciplinary dismissal - where declared or acknowledged as being justified in either case - nor in cases of termination due to resignation, death, retirement or total, absolute permanent disability or comprehensive disability of the worker, or due to the expiry of the agreed term or the completion of the project or service forming the subject matter of the contract, or termination during the worker’s trial period.
- Victims of gender-based and domestic violence, of terrorism and of human trafficking, do not have to meet the condition of being unemployed.
- Potential beneficiaries of these reductions are employers with fewer than 50 employees at the time of hiring, including independent professionals and worker-owned enterprises or cooperatives joined by employees as working or business partners, provided that the latter have chosen a social security scheme for employees. In the case of workers hired under work-experience contracts and made available to user companies, said companies will be entitled, on the same terms, to identical reductions where, without a break in continuity, they arrange an indefinite-term employment contract with those workers.
- Starting on January 1, 2017, the social security contribution relief will consist of a reduction, where those hired are workers registered under the National Youth Guarantee System who meet the requirements imposed under article 105 of Law 18/2014, of October 15, 2014, approving urgent measures for growth, competitiveness and efficiency, said reduction being applied on the same terms as those of the reductions stipulated under article 3 of Law 3/2012 (article 3.5 Law 3/2012).
B. Incentives for hiring under temporary contracts (pursuant to the provisions of Law 43/2006)
|Persons with disabilities hired under temporary contracts to foster employment (art. 2.2.4 Law 43/2006)||In general.||Men < 45 years||Men > 45 years||Women < 45 years||Women> 45 years||Throughout the term of the contract.|
|Socially-excluded persons (art. 2.5 Law 43/2006)||
|Victims of gender-based or domestic violence (art. 2.4 Law 43/2006)||
|Victims of terrorism (art. 2.4 bis Law 43/2006)||
|Victims of human trafficking (art. 2.4 ter Law 43/2006)||
C. Incentives for hiring under indefinite-term contracts, under temporary contracts or for conversion into indefinite-term contracts through special employment centers (pursuant to the provisions of Law 43/2006)
|Unemployed persons with disabilities hired under temporary or indefinite-term contracts through special employment centers (art. 2.3 Law 43/2006)||100% of the employer’s social security contributions, including contributions for occupational accidents and sickness and joint collection contributions.||Throughout the term of the contract.|
D. Incentives for training and apprenticeship contracts (article 3 of Law 3/2012)
|Unemployed persons registered as job seekers with the Employment Office||For contracts executed after July 8, 2012.||Reduction in employer’s contribution to social security for common contingencies, including those relating to occupational accidents and illnesses, unemployment, wage guarantee fund and vocational training, equal to 100% in the case of employers with fewer than 250 employees; and 75% in the case of employers with 250 or more employees (Article 3.1 Law 3/2012).||Throughout the term of the contract, including renewals.|
|Regardless of the date on which they are executed.||Reduction in employer’s social security contribution of €1,500 per year (€1,800 in the case of women) where training and apprenticeship contracts which have terminated are converted into indefinite-term contracts (Article 3.2 Law 3/2012).||3 years.|
- The employer social security contribution relief stipulated for training and apprenticeship contracts will consist of a reduction, where those hired are workers registered under the National Youth Guarantee System who meet the requirements imposed under article 105 of Law 18/2014, of October 15, 2014, approving urgent measures for growth, competitiveness and efficiency, said reduction being applied on the same terms as those of the reductions stipulated under article 3 of Law 3/2012 (article 3.5 Law 3/2012).
The above does not preclude the reductions provided for in Order ESS/2518/2013 of December 26, 2013, regulating the training aspects of the contract for training and apprenticeship, whereby enterprises may finance the cost of training inherent in this type of contract through reductions in employer social security contributions. The maximum amount of these reductions will be the result of multiplying the economic module in question (face-to-face training: €8/hour; and distance training: €5/hour) by the number of hours equal to 25% of the working hours during the first year, and 15% of the working hours the second and third years.
However, when the persons hired are beneficiaries of the Youth Guarantee System, the reductions in employer social security contributions are increased. In these cases, the above-mentioned multiple will be increased to 50% of the working hours during the first year, and to 25% of the working hours the second and third years.
E. Incentives for indefinite-term employment and for independent professionals under Law 1/2015
Article 8 of Law 25/2015, of July 28, 2015, on the second chance mechanism, the reduction of financial burden and other social security measures, regulates the incentive for indefinite-term employment and for independent professionals. This incentive consists of the possibility of reducing the employer social security contribution, in any of its forms, in cases of indefinite-term hiring. In order to be eligible for this incentive, companies must (i) be up to date on the performance of their tax and social security obligations; (ii) they must not have terminated employment contracts in the preceding 6 months; and (iii) they must execute indefinite-term contracts that entail an increase in the level of employment at the company; and (iv) maintain over a period 36 months not only the level of indefinite-term employment but also the level of total employment attained with such contracts.
The amount of the incentive can be up to €500, over 24 months, in cases of full-time hiring, and it is reduced proportionally, in the case of part-time contracts, based on the percentage of reduction in working time stipulated in each new contract.
Once the aforementioned period has elapsed, companies with fewer than 10 employees at the time they execute the contract qualifying for this contribution relief will be entitled to maintain the incentive throughout the following 12 months, although during this period, they may only apply the reduction up to the first €250 of the contribution base, (or, where appropriate, the relevant amount reduced proportionally, in cases of part-time hiring).
Nonetheless, this incentive will not be applicable to certain employment relationships, such as special employment relationships (senior management, etc.) or to those that affect the spouse, ascendants, descendants and other persons related by consanguinity or affinity, or to the hiring of employees who had been hired by other group companies.
Lastly, the application of this incentive will be incompatible with the application of any other social security contribution reduction in respect of the same contract, other than the relief envisaged for hiring beneficiaries of the National Youth Guarantee System.
F. Support for the employment of seasonal workers with indefinite-term contracts in the tourist industry
Additional provision three of Royal Decree-Law 35/2020, of December 22, 2020, on urgent measures to support the tourism and hospitality industries and trade and in the tax field, establishes for companies engaging in activities forming part of the tourist industry, as well as the trade and hospitality industries related thereto, will be eligible for a 50% reduction, applicable in the months from April to October 2021, in the employer social security contributions for common contingencies, as well as for items collected with the unemployment, wage guarantee fund (FOGASA) and vocational training contributions made for such workers.
To be eligible for this reduction, companies must generate productive activity in the months from April to October 2021 and commence or maintain the occupation of seasonal workers with indefinite-term contracts during those months.
For its part, additional provision 122 of the 2021 State Budget Law establishes, with effect from January 1, 2021 and for an indefinite term, for companies engaging in activities forming part of the tourist industry, as well as the trade and hospitality industries related thereto, which generate productive activity in February, March and November of each year and commence or maintain the occupation of seasonal workers with indefinite-term contracts during those months, the possibility of applying a reduction in these months of 50% of the employer’s social security contribution for common contingencies, as well as for items collected with the unemployment, wage guarantee fund (FOGASA) and vocational training contributions made for such workers.