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V0002-14 3 January 2014 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · residencia fiscal

Company must make IRPF withholdings while worker retains Spanish tax residency

A company asks about the tax status of an employee moving to Colombia and their IRPF or IRNR withholding obligations. The DGT explains how to determine tax residency and when to apply IRPF or IRNR withholdings based on relocation.

The question raised

Tax residence of the worker who will relocate to Colombia at the end of May 2013. The obligation to withhold on the part of the consultant. If the worker were considered a non-tax resident in Spain in the year 2014, would the employment income received from the consultant be subject to taxation in Colombia? In this case, would there be an obligation to withhold on the part of the consultant and to declare said income in any informative model?

The DGT's ruling

Tax residence is determined by complete tax periods pursuant to Article 9 of the LIRPF, computing a stay of more than 183 days. If the worker is a resident in Spain, they are taxed on their worldwide income. To apply the exemption under Article 7.p) LIRPF, the work must be effectively performed abroad for a non-resident entity or permanent establishment, and must constitute an intra-group service that produces an advantage for the recipient entity. Monitoring activities carried out by the parent company for its own interests as a shareholder are not considered intra-group services.

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