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V0490-16 8 February 2016 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · exención

Requirements for exemption from foreign work income tax

A Spanish company asks how to apply the tax exemption for employees working abroad. The DGT explains that to claim an exemption of up to €60,100, the worker must be a fiscal resident in Spain and the work must be carried out for a non-resident entity or through intragroup services generating profit to the recipient.

The question raised

Question raised: Application of the exemption under Article 7 p) of Law 35/2006, on Personal Income Tax.

The DGT's ruling

To apply the exemption under Article 7 p) of the Personal Income Tax Law (LIRPF), the worker must be a tax resident in Spain and meet three requirements: the work must be effectively performed abroad, it must be performed for a non-resident entity or a permanent establishment abroad, and an analogous tax must be applied in the destination country, which must not be a tax haven. In the case of intra-group services, there must be an advantage or benefit for the non-resident entity, pursuant to Article 18 of the Corporate Income Tax Law (LIS). Activities carried out by the parent company for its own interest as a shareholder are not considered intra-group services for the purposes of this exemption.

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