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V1073-15 8 April 2015 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IRPF · exención

Requirements for claiming foreign work exemption (Art. 7.p LIRPF)

A multinational company asks whether its workers deployed in Europe can claim IRPF exemption for foreign work. The DGT states that the exemption applies if the conditions of physical relocation, non-resident recipient, and fiscal territoriality are met.

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 and partial modification of the laws on Corporate Tax, Non-Resident Income Tax, and Wealth Tax, is appropriate.

The DGT's ruling

To apply the exemption under Article 7(p) of the Personal Income Tax Law (LIRPF), the work must be effectively performed abroad at a temporary workplace outside of Spain. The recipient must be a non-resident entity or a permanent establishment abroad, complying with intra-group service requirements if a relationship exists. Furthermore, an analogous tax to the Personal Income Tax must apply in the destination country, and it must not be a tax haven. The exemption is limited to 60,100 euros per year and is incompatible with the regime of excluded excess income.

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