No physical relocation means no tax exemption for work performed abroad

The Directorate General of Taxes (DGT) has issued a relevant ruling for professionals providing remote services to non-resident entities. The main issue lies in determining whether providing services via telematics from Spanish territory allows access to the tax exemption provided for work performed abroad.

What the DGT has ruled

The query concerned the applicability of the exemption regulated in Article 7.p) of the Personal Income Tax Law (LIRPF) regarding amounts received from a US company. The taxpayer provided teaching services online from Spain.

The DGT has ruled that it is not possible to apply said exemption. The criteria establish that, to comply with the requirements of Article 7.p) of the LIRPF, it is necessary for the work to be effectively performed abroad. This implies two concurrent conditions: that there is a relocation of the worker outside of Spain and that the workplace is located outside the national territory. Since the services were provided telematically from Spain, the legal requirements are not met, regardless of whether the paying entity is a non-resident.

What this means for you

This ruling directly affects professionals and workers operating under teleworking modalities for clients or companies located abroad. If you reside in Spain and carry out your professional activity from your home or any other point in the national territory, you cannot avail yourself of the exemption for work performed abroad, even if your employer or client has no presence in Spain.

The key for the Tax Administration is not the residence of the entity that pays the salary or fees, but the physical location where the professional activity is developed.

What you should do

In light of this resolution, it is necessary to evaluate the nature of your activity and your physical location during the provision of services. If your intention is to apply tax benefits for work performed abroad, you must verify that your situation strictly complies with current regulations, which requires physical presence abroad. It is recommended to assess each particular situation to ensure that the applied tax treatment is correct according to the LIRPF and the RIRPF regulations.