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V2359-14 10 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 a Spanish resident entity

A researcher asked whether salaries from a contract with a Spanish university for overseas placements are exempt from income tax. The DGT states that the exemption does not apply because the work is not performed for a non-resident entity.

The question raised

Whether the earnings from employment derived from the described contract are subject to the exemption provided for 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 for a permanent establishment abroad. In this case, as the employer is a Spanish university, the earnings do not benefit from the exemption and are subject to general taxation and withholding. The fact that the workplace is temporarily located outside of Spain does not change the nature of the employer.

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