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V2271-14 4 September 2014 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · exención por trabajos en el extranjero

Exemption for foreign work does not apply if employer is Spanish resident

An investigator on a public university contract in Spain asking about foreign work income exemption is advised that the exemption does not apply as the work is not performed for a non-resident entity.

The question raised

Whether the earnings from work derived from the described contract are eligible for the exemption provided in letter p) of Article 7 of the Personal Income Tax Law. Whether said earnings are subject to withholding and the applicable withholding rate.

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 company or entity not resident in Spain or a permanent establishment abroad. In this case, as the contract is with a Spanish public university, the earnings do not meet the non-resident entity requirement. Therefore, the income is fully taxable under Personal Income Tax (IRPF) and is subject to the withholding system.

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