Can UK payroll refuse to run Spanish payroll?

I've just re-read the notes from a client call in April and there's something nobody talks about that stopped their entire Spanish expansion cold for six weeks. It wasn't Hacienda. It wasn't tax residency rules or transfer pricing. It was their UK payroll provider refusing to run Spanish payroll through their existing system.

Sounds trivial until you realise they'd already hired three people in Madrid, signed a lease, and promised clients a go-live date.

The 'simple operational detail' they'd left until week three became a six-week scramble involving emergency local payroll setup, retrospective contract amendments and some very awkward conversations with new employees about delayed first payments.

Here's what I now ask every client before they incorporate: 

'Who's actually going to run your Spanish payroll and have you confirmed they can handle Spanish social security, IRPF withholding and monthly reporting?' 

It's the least exciting question in international expansion, but I've watched it derail more launches than complex tax structuring ever has.

++ I'm Rolf, I talk about business compliance, Spanish market entry and accounts in Spain's complex business landscape. Follow me for insights, tips and advice about cross-border accountancy.