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V1294-18 17 May 2018 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · exención

Requirements for exemption from foreign work income

A professional asks whether they can claim exemption for work done abroad when transitioning from self-employed to an employee in Malta. The DGT states that eligibility depends on specific conditions regarding the recipient entity and the location of the work.

The question raised

In the event of accepting the offer and becoming an employee of the foreign company, whether the exemption regulated in Article 7 p) of the Personal Income Tax Law would be applicable to him/her.

The DGT's ruling

To apply the exemption, the work must be effectively performed abroad, which requires travel and that the place of work be outside of Spain. Furthermore, the entity receiving the work must be a non-resident company in Spain or a permanent establishment abroad. It is not necessary for the income to be effectively taxed in the destination country, provided that an analogous tax is applied and it is not a tax haven. The exemption shall only apply to the remuneration accrued during the days of stay abroad.

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