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V2459-14 18 September 2014 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · exención por trabajos en el extranjero

Foreign work exemption requires effective service to a non-resident entity

The DGT confirms that the exemption from IRPF for work abroad applies only if the service provides a benefit or utility to a non-resident entity, meeting intragroup services requirements.

The question raised

Application of the exemption provided for in letter p) of Article 7 of the Personal Income Tax Law.

The DGT's ruling

To apply the exemption under Article 7(p) of the Personal Income Tax Law (LIRPF), the work must be effectively performed abroad for a non-resident entity or a permanent establishment. If the entity is a related party, the service must provide an advantage or benefit to the recipient entity pursuant to Article 16.5 of the Corporate Income Tax Law (TRLIS). It is not considered an intra-group service if the activity is carried out for the own interests of the parent company or legal structure. Furthermore, the country must have a double taxation treaty including an information exchange clause and must not be a tax haven.

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