The tête-à-tête between the two European leaders has been on the cards for some time, but on Monday more details of the meeting emerged.
The two leaders will sit down to talks in the northern Spanish city of Santiago de Compostela on Monday August 25th. A day earlier, however, Merkel and Rajoy will take a Sunday walk along the Camino de Santiago — or 5km (3 miles) of it anyway.
The stroll will end with a visit to Santiago de Compostela's monumental Romanesque cathedral, a spokesperson for the German government said on Monday.
Rajoy, a jogger, will have to his work cut out to keep up with Merkel during the walk. The chancellor, who just turned 60, is a keen hiker whose annual holidays are spent on the Italian Alps.
But the Spanish prime minister — interrupting his summer break to meet his German counterpart — will have a distinct home advantage: he was actually born in Santiago.
Rajoy will also be able to take some comfort in Spain's recent strong growth figures. While Germany's economy contracted 0.2 percent in the second quarter, Spain clocked up its fastest growth in six years — some 0.6 percent according to preliminary estimates.
During their talks, the two leaders are expected to discuss the state of negotiations for the new European Commission.
While Luxembourg politician Jean-Claude Juncker has been named the Commission's president-elect, other positions remain open after officials were unable to reach agreement on who should be handed the Commission's remaining posts.