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V0801-15 13 March 2015 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · exención por trabajos en el extranjero

Workers posted abroad may qualify for foreign work exemption

A company asks whether employees sent overseas for installations or repairs may be taxed in the destination country and whether they can benefit from exemption under article 7.p) of the LIRPF. The DGT explains that taxation depends on the worker's fiscal residence and the existence of double taxation treaties, and that the exemption requires the work to be carried out for a non-resident entity and to provide a benefit to the recipient.

The question raised

Question posed: Whether the country where the work is performed may tax the income received by the displaced employees.

The DGT's ruling

To apply the exemption under art. 7.p) of the LIRPF, the work must be effectively performed abroad for a non-resident entity or a permanent establishment abroad. If the recipient entity is related to the employer, the service must produce an advantage or utility to the non-resident entity pursuant to the LIS. Furthermore, a tax of an identical or analogous nature must be applied in the destination country, and it must not be a tax haven.

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