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V2480-14 23 September 2014 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · exención de rendimientos del trabajo

Retentions on exempt foreign earnings can be refunded

A company asks whether it can recover IRPF withholdings from workers sent to foreign clients. The DGT responds that if exemption conditions are met, no retention is required and a refund can be requested.

The question raised

Whether the refund of the withholdings applied to the payrolls of said workers may be requested.

The DGT's ruling

Income from employment for services performed abroad is exempt from Personal Income Tax (up to 60,100 euros annually) if provided to a non-resident entity in a country with an analogous tax or an information exchange agreement. As these are exempt earnings, there is no obligation to apply withholding. Both the withholding agent and the employee who has borne the withholding are entitled to request the refund of undue payments, provided that the withholding has not already been deducted in a tax return.

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