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V2223-22 25 October 2022 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · teletrabajo

Income from teleworking from Spain for a Dutch company is only taxable in Spain

A resident in Spain inquires whether their salary for teleworking for a company in the Netherlands should be subject to withholding in said country or in Spain. The DGT determines that, as the employment is physically exercised in Spain, the income may only be subject to taxation in Spain.

The question raised

Question raised: Tax treatment of the employment income obtained: whether the company can practice withholdings in favor of the Dutch Tax Authority or whether it must practice them in favor of the Spanish Tax Authority or should not practice withholdings. For the first case, to determine whether those withholdings paid to the Dutch Tax Authority can be offset in the income tax return in Spain.

The DGT's ruling

According to the Convention between Spain and the Netherlands, the salaries of a resident are only taxable in their State of residence, unless the employment is exercised in the other State. Since the teleworking is physically performed from a residence in Spain, the employment is exercised in Spain and the taxing power corresponds exclusively to this country. The Dutch company will only have an obligation to withhold if it operates in Spain through a permanent establishment or under the assumptions of employment income provided for in the RIRPF.

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