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V0627-18 7 March 2018 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · exención

Requirements for exemption from income tax on foreign work (Art. 7.p LIRPF)

A company asks whether its employees on foreign assignment can benefit from IRPF exemption for foreign work. The DGT responds that the exemption applies only if the work is carried out for a non-resident entity or a foreign permanent establishment, not for the Spanish company itself.

The question raised

Whether the exemption provided for in Article 7 p) of the Personal Income Tax Law is applicable to the portion of the remuneration received by displaced workers corresponding to the work effectively performed abroad.

The DGT's ruling

To apply the exemption, the work must be performed for a non-resident entity or a permanent establishment abroad. If the travel is to perform commercial activities for the benefit of the Spanish company itself, the exemption is not applicable. Furthermore, the destination country must have an analogous tax and must not be a tax haven, without it being necessary for the income to be effectively taxed there. The exemption shall apply only to the days of stay and remunerations corresponding to the countries that meet the requirements.

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