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V1503-15 18 May 2015 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · residencia fiscal

Foreign work exemption requires specific conditions and service nature verification

A non-governmental organisation asks whether its cooperative workers deployed abroad can benefit from the personal income tax exemption for foreign work. The DGT states that this exemption applies only if certain conditions are met, particularly regarding whether the work is carried out for a non-resident entity or a permanent establishment.

The question raised

Tax residence of cooperating workers deployed abroad.

The DGT's ruling

To apply the exemption, the work must be effectively performed abroad and for a non-resident entity or permanent establishment. If the recipient is a related entity, the service must produce an advantage or utility to the recipient entity (intra-group service). Furthermore, an identical or analogous tax must apply in the destination country, and it must not be a tax haven. There is no obligation to withhold tax on income that is exempt.

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