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V2710-14 9 October 2014 · SG de Fiscalidad Internacional Criterion in force
IRPF · residencia fiscal

Foreign work exemption requires service to a non-resident entity or permanent establishment

A worker relocated to the UAE seeks advice on his tax residency and eligibility for foreign work exemptions. The DGT examines whether, as a Spanish resident, he can apply the exemption under article 7.p) of the Spanish Personal Income Tax Law.

The question raised

The consultant raises the following questions:

The DGT's ruling

If the worker does not prove tax residence in the UAE, they shall be a resident in Spain and taxed on their worldwide income. In this case, UAE income may be taxed in both countries according to the Convention, and the exemption under art. 7.p) LIRPF may apply if the requirements for intra-group services are met and it is not a tax haven. If they are a non-resident, they will only be taxed in Spain on Spanish-source income, which would not occur if the work is performed entirely in the UAE.

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