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V0571-14 5 March 2014 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · residencia fiscal

Foreign work exemption requires utility to recipient and analogous tax

A worker posted to Honduras for a Spanish entity asks whether the exemption for foreign work applies. The DGT states that the exemption applies only if it can be demonstrated that the work is carried out for a non-resident entity or a permanent establishment and that the country has a tax similar to the Spanish personal income tax.

The question raised

Tax residence of the taxpayer.

The DGT's ruling

To apply the exemption under Article 7.p) of the LIRPF, the work must be effectively performed abroad for a non-resident entity or a permanent establishment abroad. If the entity is related, the service must produce an advantage or utility to the recipient entity, pursuant to Article 16.5 of the TRLIS. Furthermore, in the destination country, a tax of an identical or analogous nature to the IRPF must apply, and it must not be a tax haven. In the case of Honduras, as there is no double taxation treaty, the existence of said tax must be proven as a matter of fact.

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