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V2203-20 30 June 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · residencia fiscal

Foreign work income exemption depends on intra-group service nature and tax presence in destination country

A Spanish technical architect working for a Spanish company in its Angolan subsidiary asks whether the foreign work exemption applies. The DGT states that the exemption will only apply if all legal requirements are met, particularly the nature of the intra-group service and the existence of a similar tax in Angola.

The question raised

Tax residency.

The DGT's ruling

To apply the exemption under Article 7 p) of the LIRPF, the worker must be a tax resident in Spain and meet three requirements: performing the work effectively abroad, performing it for a non-resident entity or permanent establishment (analyzing whether an intra-group service exists that produces an advantage for the recipient entity according to the LIS), and ensuring that an identical or analogous tax to the IRPF is applied in the destination country, which must not be a tax haven. In the case of Angola, as there is no double taxation treaty with Spain, the existence of an analogous tax is a matter of fact to be verified.

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