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V0100-14 20 January 2014 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · exención por trabajos en el extranjero

Exemption for foreign work requires employment relationship

The DGT confirms that a sole director and shareholder of a Spanish company cannot claim exemption from foreign work earnings as no employment relationship exists due to effective control.

The question raised

Whether the application of the exemption provided for in letter p) of Article 7 of the Personal Income Tax Law is appropriate.

The DGT's ruling

The exemption under Article 7(p) of the Personal Income Tax Law (LIRPF) applies only to income from employment derived from an employment or statutory relationship. It is not applicable if the income arises from management functions, as these do not constitute an employment relationship when there is effective control of the company. In this case, as the administrator holds more than 50% of the capital, they are excluded from the employment relationship and cannot access the exemption.

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