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V0720-20 6 April 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · exención

Foreign work exemption requires overseas workplace and non-resident entity

A British employee asks whether foreign work income can be exempted. The DGT states that exemption depends on whether services are genuinely rendered abroad and whether the recipient entity is non-resident.

The question raised

Whether the exemption regulated in letter p) of Article 7 of the Personal Income Tax Law is applicable to you.

The DGT's ruling

The exemption requires that the work be effectively performed abroad, which implies a displacement and that the place of work is outside of Spain. Likewise, the entity receiving the work must be a non-resident in Spain or a permanent establishment abroad. It is not necessary for the income to have been taxed in the country of origin; it is sufficient that there exists a tax of a similar nature and that the country is not a tax haven or has an information exchange agreement with Spain. The exemption is incompatible with the regime of excess income excluded from taxation.

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