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V1334-20 11 May 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · exención

Foreign work exemption requires service for a non-resident entity

The consultant asks whether exemption applies to work carried out in Israel. The DGT states that exemption can only be claimed if it is proven that the work is carried out for a non-resident company or a foreign permanent establishment.

The question raised

Question posed: Possibility of applying the exemption regulated in Article 7 p) of the Personal Income Tax Law.

The DGT's ruling

To apply the exemption under Article 7 p) of the Personal Income Tax Law (LIRPF), the work must be performed for a company or entity not resident in Spain or a permanent establishment abroad. Furthermore, it must be ensured that a tax of an identical or analogous nature is applied in the territory where the work is performed and that it is not a tax haven. It is not necessary for the income to have been effectively taxed abroad; it is sufficient that the country has a treaty with Spain that includes an exchange of information clause.

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