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V3226-18 19 December 2018 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · exención

Requirements for exemption from foreign work income

A German company asks whether its employee resident in Spain can benefit from the exemption for work carried out abroad. The DGT states that the exemption applies only if the work is physically performed outside Spain for a non-resident entity and the destination country meets tax and double taxation treaty requirements.

The question raised

Whether the exemption regulated in Article 7 p) of the Personal Income Tax Law is applicable to the remuneration corresponding to work effectively performed abroad.

The DGT's ruling

To apply the exemption under Article 7.p) of the Personal Income Tax Law (LIRPF), the work must be physically performed outside of Spain and for a non-resident entity or a permanent establishment abroad. If the worker performs services for a permanent establishment in Spain, the requirement is not met. Furthermore, in the territory where the work is performed, a tax of an identical or analogous nature must apply, and it must not be a tax haven. The exemption applies to remuneration earned during the days of stay abroad, with a limit of 60,100 euros per year.

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