Remote working has become an established way of working in Spain since the approval of Law 10/2021 on remote work (Ley 10/2021, de trabajo a distancia). However, many companies still have questions about key issues such as mandatory expense compensation, the tax implications and working-time records. In this article we explain everything you need to know to comply with the regulations and put an effective remote working policy in place at your company.
When does the Remote Work Law apply?
The remote working regulations apply when remote work exceeds 30% of working time over a three-month reference period. Above this threshold, the company must formalise a written remote working agreement with the employee and comply with all the obligations laid down by the law, particularly regarding expense compensation.
It is important to stress that remote working must be voluntary for both parties: both the company and the employee must agree to it. In addition, the arrangement must be documented in an individual agreement covering matters such as the percentage of working time spent remotely, the place of work, working hours, the equipment provided and expense compensation.
Expense compensation: a non-waivable employer obligation
One of the most important aspects of Law 10/2021 is the employer’s obligation to pay for or compensate all expenses arising from remote working. This means that the cost of electricity, internet, heating, water and other utilities needed to carry out the work cannot fall on the employee.
What must the company provide or compensate?
The company is obliged to provide or compensate:
- Basic equipment: a computer, a mobile phone with a line and data, and an ergonomic chair (where needed to carry out the professional activity). Optionally, it may provide or compensate additional items such as a keyboard, mouse or extra screen.
- Utility costs: electricity, internet, heating and other expenses arising from the use of the home as a workplace.
- Other associated expenses: any additional cost needed to perform the job from home.
Forms of compensation
Companies can choose different methods to meet this obligation:
- Fixed monthly allowance: this is the most common approach. The company sets a fixed monthly amount (for example, 55 euros a month under some collective agreements), paid in proportion to the percentage of working time agreed as remote work. This amount should be reviewed periodically and updated in line with pay rises.
- Reimbursement of documented expenses: payment based on invoices submitted by the employee for internet, electricity, telephone or specific equipment, up to a set maximum (for example, 130 euros for supplementary equipment).
- Direct provision of equipment: the company directly provides all the necessary resources without any additional financial compensation, bearing the cost itself.
Key legal considerations
Expense compensation is neither negotiable nor replaceable. The courts, including the National High Court (Audiencia Nacional), have declared void clauses that sought to replace financial compensation with other benefits such as personal days off or pay improvements. Employees are entitled to expense compensation in addition to their ordinary salary and other employment benefits.
The amount and method of payment must be set out in writing in the individual remote working agreement or in the applicable collective agreement. It is essential to document this clearly to avoid later disputes.
Taxation of remote working: key points
Compensation for remote working expenses has a specific tax treatment that companies need to be aware of:
Taxation of the employee
Remote working does not change how the employee is taxed. Income from remote work is subject to personal income tax (IRPF) with the same withholdings as on-site work. The company must apply the corresponding withholdings according to the official tables.
Expense compensation and social security contributions
Remote working expense compensation, where its compensatory nature is properly evidenced, is not subject to Social Security (Seguridad Social) contributions or to IRPF withholding, as it is considered an expense necessary to carry out the work. However, it must be properly justified and documented.
Remote working for a foreign company
When an employee lives in Spain (for more than 183 days a year) but works for a foreign company, they are considered a Spanish tax resident and are taxed in Spain on their worldwide income, including income from the foreign company.
In these cases:
- The foreign company is generally not obliged to withhold IRPF, unless it operates in Spain through a permanent establishment
- The foreign company may register with the Spanish Social Security system or, alternatively, the employee may register as self-employed (autónomo)
- The double taxation treaties signed by Spain apply, to avoid paying tax twice
Digital nomads and international mobility
If the employee moves abroad temporarily as a digital nomad, their tax position is determined by the double taxation treaty with that country. It is essential to analyse each specific case to determine tax residence and the corresponding tax obligations.
Working-time records for remote work: mandatory and subject to penalties
Recording working hours when working remotely is mandatory under Law 10/2021, with the same requirements as for on-site work. Companies must implement a reliable system that records the start, end and breaks of the working day.
Features of the working-time recording system
- Fully mandatory: the exact start and finish times must be recorded, just as for on-site work.
- Digital tools: apps, web-based software or other digital tools that make it easy to record hours from home must be used. The company must bear the cost of these tools.
- Recording breaks: the system must allow interruptions to work to be documented, so that actual working time is accurately recorded.
- Retention: records must be kept for four years and made available to the Labour Inspectorate (Inspección de Trabajo).
- Flexible working hours: employees are entitled to a degree of flexibility in their working hours, provided that the agreed availability periods and statutory rest periods are respected.
Right to digital disconnection
Working-time records are directly linked to the right to digital disconnection. Employees are not required to respond to digital devices outside their working hours, except in exceptional, justified emergencies.
Many collective agreements set specific time slots (for example, no calls or emails between 19:00 and 08:00) to guarantee this fundamental right and prevent hyperconnectivity.
Penalties for non-compliance
Failure to comply with the obligation to record working hours can result in serious penalties of up to 6,250 euros imposed by the Labour Inspectorate. Furthermore, without proper working-time records, the company cannot demonstrate compliance with working-time limits and mandatory rest periods.
Conclusion
The regulation of remote working in Spain sets out clear obligations for companies: mandatory expense compensation, effective working-time records and respect for digital disconnection. These obligations are not negotiable, and failure to comply can lead to financial penalties and employment disputes.
Implementing an effective remote working policy requires formalising individual written agreements, establishing clear and documented expense compensation systems, putting reliable digital time-recording tools in place and designing procedures that guarantee employees’ digital disconnection.
At Strengthen we help companies design remote working policies that comply with all current regulations. Our employment advisers can help you draft remote working agreements, set up appropriate expense compensation systems, implement working-time controls that comply with the law and align these policies with your company’s tax position.
We also advise you on the tax implications of remote working, both for employees resident in Spain and in international situations, including remote work for foreign companies and the mobility of digital nomads.
Does your company have remote workers? Get in touch with Afianza’s employment experts and make sure you meet all your legal obligations regarding expense compensation, taxation and working-time records.
