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V1091-14 14 April 2014 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · exención

Foreign work exemption requires service to be effectively rendered to a non-resident entity

A worker on a Spanish contract is seconded to work for a subsidiary in the Netherlands and asks whether the foreign work exemption applies. The DGT states that the exemption applies only if the service is considered intragroup and produces an advantage or benefit 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 and for a non-resident entity. If the recipient entity is related, there must be an intra-group provision of services that produces an advantage or benefit for the non-resident entity, pursuant to Article 16.5 of the TRLIS. Furthermore, a tax of a similar nature must be applied in the destination country, and it must not be a tax haven. The exemption shall apply only to the days of stay and remuneration corresponding to the countries that meet these requirements.

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