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V1930-17 19 July 2017 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · exención

Foreign work exemption requires services for a non-resident entity or foreign permanent establishment

A Belgian company asks whether its Spain representative office coordinator can benefit from the foreign work tax exemption. The DGT states that the exemption depends on whether the work is carried out for a non-resident entity and whether the Spain office constitutes a permanent establishment.

The question raised

Question posed: In relation to said coordinator and the remuneration corresponding to the work performed abroad, whether the exemption under Article 7 p) of Law 35/2006, on Personal Income Tax, is applicable.

The DGT's ruling

To apply the exemption under Article 7 p) of the Personal Income Tax Law (LIRPF), the work must be effectively performed outside of Spain for a non-resident entity or a permanent establishment abroad. If the office in Spain constitutes a permanent establishment, this requirement would not be met. Furthermore, the destination country must have an analogous tax and must not be a tax haven, which is satisfied if an information exchange agreement with Spain exists. The exemption shall only apply to the remuneration corresponding to the days of stay abroad and is subject to an annual limit of 60,100 euros.

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