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V0577-14 5 March 2014 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · exención por trabajos en el extranjero

Foreign work exemption requires intragroup service and non-tax haven country

A Spanish resident working for a Spanish company who sends an employee to Mauritania asks whether the foreign earnings exemption applies. The DGT states that the exemption requires specific conditions regarding the nature of intragroup services and the tax status of the destination country.

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 LIRPF, the work must be effectively performed abroad and for a non-resident entity or permanent establishment. If the entity is related, the service must be an intra-group service that produces an advantage or benefit to the recipient entity, pursuant to Article 16.5 of the TRLIS. Furthermore, an tax of an identical or analogous nature to the IRPF must be applied in the destination country, and it must not be a tax haven. In the case of Mauritania, due to the absence of a treaty with Spain, the existence of an analogous tax is a matter of fact to be assessed by the Administration.

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