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V0035-16 8 January 2016 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · exención

Income tax exemption for work performed abroad may apply if specific requirements are met

A consultancy firm has enquired whether its employees seconded abroad to value assets can benefit from the exemption under Article 7.p) of the Personal Income Tax Law (LIRPF). The Directorate General for Taxes (DGT) clarifies that the exemption requires the work to be performed for a non-resident entity or a permanent establishment abroad, and that the country must not be a tax haven.

The question raised

Question posed: Application, to the workers on the consultant's staff who must travel abroad to perform asset and business valuation work for a foreign client, of the exemption established in letter p) of Article 7 of the Personal Income Tax Law.

The DGT's ruling

To apply the exemption, the work must be effectively performed outside of Spain and for a non-resident company or a permanent establishment abroad. If the client is a resident in Spain but has a permanent establishment in the country where the work is performed, the exemption may apply if this is the ultimate recipient. It is not necessary for the income to be taxed abroad; it is sufficient that an analogous tax is applied in that country and that it is not a tax haven. The exemption is limited to 60,100 euros per year and is incompatible with the regime of excess income excluded from taxation.

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