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V0178-14 27 January 2014 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · exención

Requirements for exemption from income tax on foreign temporary assignments and group services

A company asks whether temporarily assigned staff can benefit from the exemption under article 7.p) of the LIRPF. The DGT states that such exemption applies only if the work is genuinely carried out abroad, for a non-resident entity, in countries with analogous taxes, excluding tax havens.

The question raised

Whether the application of the exemption established in letter p) of Article 7 of Law 35/2006, of November 28, on Personal Income Tax is appropriate.

The DGT's ruling

To apply the exemption, the work must be physically performed abroad and for a non-resident entity or permanent establishment. If the entity is a related party, the service must provide an advantage or benefit to the recipient, being considered an intra-group service if an independent company would have paid for it. Furthermore, an identical or analogous tax must apply in the destination country, and it must not be a tax haven. If work is performed in multiple countries, the tax requirement is analyzed individually for each territory.

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