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V2049-23 13 July 2023 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · exención por trabajos en el extranjero

Foreign earnings may be exempt if specific conditions met

A Spanish company asks whether salaries and allowances for workers sent to Saudi Arabia are exempt from income tax. The DGT states that exemption depends on the work being carried out for a non-resident entity and compliance with territoriality and amount thresholds.

The question raised

Whether the income paid by the consultant to displaced workers, both as per diem and for work in Saudi Arabia, will be exempt from taxation and whether there will be no obligation to withhold tax on the exempt income.

The DGT's ruling

To apply the exemption under Article 7.p) LIRPF, the recipient of the work must be a non-resident entity or a permanent establishment abroad. It is required that the workplace be temporarily outside of Spain and that the destination country has an information exchange agreement with Spain. The exempt income includes specific remuneration and the proportional part of non-specific remuneration for the days of stay, including travel days. This exemption is incompatible with the excess regime, but compatible with the general per diem regime provided its limits are respected.

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