PAYSLIP BREAKDOWN:
Every payslip is made up of 2 types of amounts or items.
On one side, we have the positive amounts which together make up the total gross earnings, and on the other side we have the deductions.
The difference between the total gross earnings (positive amount) and the deductions (negative amount) gives the net amount payable — that is, the amount the employee actually receives.
Written by Lluis Prat
employment lawyer
Total gross earnings on a payslip
The total gross earnings comprise the salary, bonuses and any other pay items that must appear on the payslip.
Deductions on a payslip
There are two categories of deduction:
1.- Social Security contributions (the portion payable by the employee).
Social Security contributions are calculated by applying percentage rates set by regulation to the contribution base.
The contribution base is the amount of the employee's gross pay that is subject to contributions under the applicable rules, including the pro-rated share of extra payments. Accordingly, the contribution base may or may not match the total gross earnings figure. If the employee's extra payments are not spread across the year (pro-rated), the total gross earnings will not match the contribution base. However, if they are pro-rated, the two figures will match — unless the total gross earnings include items that are exempt from contributions.
The contribution bases for the General Social Security Scheme in 2024 are as follows:
2.- Personal Income Tax (IRPF) Withholding.
A withholding percentage for Personal Income Tax (IRPF) (income tax) is applied based on the employee's salary and personal circumstances.
This percentage is applied to the gross amounts of the total accrued that are subject to Personal Income Tax (IRPF). Therefore, unless there are exempt or non-taxable amounts, the total accrued should be fully subject to Personal Income Tax (IRPF) withholding. An example of a non-taxable amount would be per diems.
Once the negative amounts have been calculated, they are deducted from the total accrued to arrive at the net amount payable.
Do you need advice on payslips?
Get in touch with us:
Interactive payslip example — explore the different components:
<style>iframe{width:100%; height:600px}</style>
PAYSLIP EXAMPLE IN ENGLISH:
