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V1542-14 11 June 2014 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · exención por trabajos en el extranjero

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

A Spanish worker posted to a Moroccan subsidiary asks whether he can claim tax exemption for foreign work. The DGT states that such exemption applies only if the service is an intragroup service that generates benefit or utility 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, three requirements must be met: that the work is effectively performed abroad, that it is performed for a non-resident entity or permanent establishment, and that an analogous tax is applied in the destination country and it is not a tax haven. In cases involving related parties, the service must be intra-group and produce an advantage or benefit to the non-resident entity, pursuant to Article 16.5 of the TRLIS. Activities carried out for the interests of the parent company that would not be paid for by an independent company are not considered intra-group services.

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