Skip to content
Back to index
V0150-18 26 January 2018 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · exención por trabajos en el extranjero

Foreign work exemption requires intragroup services and local tax requirements

A Spanish company asks whether it must withhold tax from an employee posted to a Peruvian branch. The DGT explains that the exemption for foreign work requires specific conditions regarding the nature of intragroup services and the existence of a similar local tax in the destination country.

The question raised

Treatment of the withholdings to be applied by the company.

The DGT's ruling

The exemption under Article 7.p) of the Personal Income Tax Law (LIRPF) requires that the work be effectively performed abroad for a non-resident entity or permanent establishment. In the case of corporate groups, the service must provide an advantage or benefit to the non-resident entity to be considered an intra-group service. Furthermore, an tax of an identical or analogous nature to the Personal Income Tax (IRPF) must be applied in the destination country, and it must not be a tax haven. The application of the exemption shall depend on the fulfillment of all these requirements.

Book your free first meeting