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V0913-14 1 April 2014 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · exención por trabajos en el extranjero

Foreign work exemption requires intragroup service benefiting the non-resident entity

A worker posted to France and Austria for training asks whether the foreign work exemption from income tax applies. The DGT states that the exemption applies only if the service is an intragroup arrangement that provides a benefit or advantage to the non-resident entity.

The question raised

Whether the application of the exemption established in letter p) of Article 7 of Law 35/2006, of November 28, on Personal Income Tax is appropriate.

The DGT's ruling

To apply the exemption under Article 7(p) of the LIRPF, the work must be effectively performed abroad for a non-resident entity or a permanent establishment. If the entity is a related party, the service must be intra-group and produce an advantage or benefit to the recipient entity, pursuant to Article 16.5 of the TRLIS. Activities carried out in the interest of the parent company (as a shareholder) are not considered intra-group services, whereas administrative or management services usually are. Compliance with these requirements is a matter of fact to be assessed by the Administration.

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