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V0386-15 2 February 2015 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · exención por trabajos en el extranjero

Foreign work exemption requires service to a non-resident entity

A worker sent to India for technical assistance asks whether foreign work exemption applies. The DGT states that exemption applies only if services are rendered to a non-resident entity or a foreign permanent establishment, provided group service conditions are met where a link exists.

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 under Article 7(p) of the Personal Income Tax Law (LIRPF), the work must be effectively performed abroad, for a non-resident entity or permanent establishment, and in a territory with an analogous tax that is not a tax haven. If the recipient is a related party, there must be an intra-group provision of services that produces an advantage or benefit to the non-resident entity, pursuant to Article 16.5 of the Corporate Income Tax Law (TRLIS). The exemption is limited to 60,100 euros per year and is incompatible with the regime for excluded excess income.

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