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V4677-16 3 November 2016 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · residencia fiscal

Foreign work earnings may be exempt from Spanish income tax under certain conditions

A Spanish resident inquires about how income from work earned by a Belgian company should be taxed and whether the foreign work exemption applies. The DGT explains that taxation depends on fiscal residency and that the exemption requires the work to be genuinely performed abroad for a non-resident entity.

The question raised

In the event that Belgium taxes such employment income paid by the Belgian company, the taxation thereof in Spain: right to a refund for double taxation and whether they would be treated as exempt income or as exempt income with progressivity.

The DGT's ruling

Income from employment for services performed abroad may be exempt pursuant to Article 7.p of the LIRPF if provided to a non-resident entity in a country with an analogous tax that is not a tax haven. For the exemption to be applicable, the work must be effectively performed outside of Spain, with the worker traveling. These exempt earnings are not considered exempt income with progressivity. In the event of double taxation, the provisions of the Convention with Belgium and Article 80 of the LIRPF shall apply.

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