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V0433-14 17 February 2014 · SG de Fiscalidad Internacional Criterion in force
IRNR · residencia fiscal

Earnings of a Brazilian resident worker are not taxed in Spain

A Spanish company asks about the fiscal residency of an employee transferred to Brazil and whether their activity creates a permanent establishment. The DGT states that if the worker is a resident in Brazil, their salaries are not subject to Spanish tax as foreign-source income.

The question raised

The following questions are raised:

The DGT's ruling

The worker is a tax resident in Brazil as they have their permanent home and center of vital interests there, which must be proven with a certificate of residence. Their income is not subject to Non-Resident Income Tax (IRNR) in Spain as the activity is carried out in Brazilian territory. There is no permanent establishment in Brazil if the employee's functions are of a preparatory or auxiliary nature, such as promotion or information, without the capacity to bind the company through contracts.

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