Solutions · Spain
EOR vs Opening an Entity in Spain
The real question is not whether you can afford a Spanish entity — it is whether a permanent structure matches how certain you are about Spain. Here is the honest comparison.
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A Spanish S.L. is not expensive to incorporate — the real cost is everything that comes after: monthly accounting, corporate tax filings, annual accounts, a mandatory registered address, legal support, and a formal liquidation process if you ever leave. Those obligations run whether you employ one person or fifty.
An Employer of Record inverts the equation: near-zero setup, a predictable monthly fee per employee, and the labor-law risk sits with us. The trade-off is a per-employee cost that, at some headcount, becomes more expensive than running your own entity. The decision is about timing, certainty and headcount — and it is reversible in both directions.
Who this comparison is for
- CFOs and finance directors sizing the total cost of a Spanish operation
- Legal and People teams assessing employment and compliance risk
- Founders deciding how to structure their first hires in Spain
- Companies approaching the headcount where an entity starts to pay off
- Teams with an entity elsewhere in the EU wondering if they need one in Spain too
The decision in four dimensions
Speed and certainty
An EOR gets your hire on a compliant contract in days. Incorporation takes 2–6 months including bank account and registrations — before your first employee can start.
Fixed vs variable cost
An entity is a fixed monthly overhead regardless of headcount. An EOR is a variable per-employee fee. Below several employees, variable almost always wins.
Where the risk sits
With an EOR, employment compliance — contracts, collective agreements, terminations — is our obligation. With your own entity, every labor mistake is yours.
Reversibility
Winding down an EOR arrangement is an offboarding with notice. Winding down an S.L. is a formal liquidation that takes months and professional fees.
How to decide
Define your horizon
Testing the market or committed for years? Uncertain plans favor EOR; a confirmed long-term operation favors an entity.
Count the full cost
Compare EOR fees against incorporation plus monthly accounting, tax compliance and legal support — not against zero. We provide both numbers.
Plan the transition
Start with EOR and switch when headcount justifies it. Employees transfer to your new entity preserving seniority and terms.
Side by side
| EOR with DNGlobalEx | Your own Spanish entity | |
|---|---|---|
| Time to first hire | Days | 2–6 months |
| Setup cost | None | Incorporation, notary, registrations, share capital |
| Monthly overhead | Fee per employee | Accounting, tax filings, registered address, legal |
| Labor compliance risk | Carried by DNGlobalEx | Carried by you |
| Corporate tax presence | None created by employment | Spanish corporate tax and filing obligations |
| Scaling down | Offboard with standard notice | Formal liquidation, months of process |
| Typical break-even | Best below ~5–10 employees | Pays off with stable, larger teams |
Frequently asked questions
At what headcount does an entity make sense? +
As a rule of thumb, somewhere between 5 and 10 stable employees the fixed costs of an entity start to beat per-employee EOR fees. The exact point depends on salaries and how much internal admin capacity you have — we model it with your numbers.
Does hiring through an EOR create a permanent establishment in Spain? +
Employment through an EOR does not by itself create a permanent establishment. PE risk depends on what your team does in Spain — for example, habitually concluding contracts. We flag PE-sensitive setups and coordinate with your tax advisors.
Can we switch from EOR to our own entity later? +
Yes, and it is the natural path: validate Spain via EOR, then incorporate when the operation is proven. Employees transfer preserving seniority and conditions, with no interruption for them.
Can we combine both? +
Yes. A common setup is running your first hires on EOR while your entity is being incorporated, then transferring — so hiring never waits for paperwork.
What does an entity actually cost to run in Spain? +
Beyond incorporation (typically €1,500–3,000 plus €3,000 minimum share capital), budget for monthly accounting and payroll, corporate tax and VAT filings, annual accounts and legal support — commonly €500–1,500+ per month depending on activity.
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