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V0732-14 17 March 2014 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · exención

Exemption for foreign work possible if non-resident entity proven

A consultancy firm asks whether its employees working abroad can claim IRPF exemption. The DGT confirms it is possible if it is demonstrated that the work is performed for a non-resident entity and territorial and tax haven requirements are met.

The question raised

Application of the exemption provided for in letter p) of Article 7 of the Personal Income Tax Law.

The DGT's ruling

To apply the exemption under Article 7 p) of the LIRPF, the work must be physically performed outside of Spain and for a non-resident entity or a permanent establishment abroad. The actual beneficiary of the service must be the non-resident entity, regardless of who issues the invoice. Furthermore, the destination country must have an analogous tax and must not be a tax haven, without it being necessary that the income was effectively taxed there. The taxpayer must prove these facts through valid means of evidence.

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