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V0631-15 20 February 2015 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · exención por trabajos en el extranjero

Exemption from IRPF for foreign work possible if final beneficiary is a non-resident entity

A company asked whether its workers could claim exemption for work carried out abroad when the contract is signed with a Spanish company but the final beneficiary is a non-resident entity in Saudi Arabia. The DGT confirms that the exemption is possible if the legal requirements are met.

The question raised

Possibility of applying the exemption provided in letter p) of Article 7 of the Personal Income Tax Law, considering that, although the sub-consultancy contract has been signed with a company resident in Spain, to which the services are invoiced, the ultimate beneficiary of the work is a non-resident entity.

The DGT's ruling

To apply the exemption under Article 7(p) of the Personal Income Tax Law (LIRPF), the work must be performed for a non-resident entity or a permanent establishment abroad. This requirement is considered met when the non-resident entity is the ultimate beneficiary or recipient of the services provided. Furthermore, the country where the work is performed must have a tax of an identical or analogous nature and must not be a tax haven, which is satisfied if a double taxation treaty with an exchange of information clause exists.

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