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V0042-23 16 January 2023 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · exención

Foreign work IRPF exemption depends on whether services are real intragroup services

A worker relocated to New York asks if his salary is exempt from IRPF due to working abroad. The DGT states that exemption requires work for a non-resident entity or a permanent establishment, and in the case of linked companies, the service must generate benefit or profit for the foreign entity.

The question raised

Whether the salary during the period of assignment to the United States is exempt from Personal Income Tax.

The DGT's ruling

For income from employment performed abroad to be exempt, three requirements must be met: that the work is effectively performed abroad, that it is performed for a non-resident entity or permanent establishment, and that an analogous tax is applied in that country without it being a tax haven. In cases involving related parties, it must be verified that the intra-group service produces an advantage or benefit to the non-resident entity pursuant to the Corporate Income Tax Act. If the activity is merely for the interests of the parent company or legal structure, it is not considered an intra-group service and no exemption would apply. The assessment of whether a provision of services exists is a question of fact for the Administration.

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