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V1741-17 6 July 2017 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · exención por trabajo en el extranjero

Exemption from tax on foreign employment requires the recipient entity to be non-resident

A taxpayer resident in Spain asks whether income from a company in Malta can be exempt under the foreign employment rules. The DGT rules that the exemption requires the work to be performed for a non-resident entity and that requirements regarding territoriality and non-tax haven status must be met.

The question raised

Question raised 1) Whether it can be considered that the remuneration obtained from the company resident in Malta, up to the limit of 60,100 euros, is exempt from taxation through the application of 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 non-resident company or a permanent establishment abroad. Physical displacement is required, and the place of work must be temporarily located outside of Spain. Furthermore, an analogous tax must be applied in the country where the work is performed, and it must not be a tax haven. The exemption is limited to the income accrued during the days of stay abroad, with a cap of 60,100 euros per year.

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