Requirements for Personal Income Tax (IRPF) exemption for work performed abroad

The application of the tax exemption for income from employment obtained abroad is subject to strict compliance with conditions relating to both the employer and the physical location of the activity. The Dirección General de Tributos (DGT) has specified the necessary elements for a worker to benefit from this provision set out in the Personal Income Tax (IRPF) regulations.

What the DGT has resolved

For the exemption established in article 7 p) of the Law of IRPF to proceed, several requirements must be met simultaneously:

• Nature of the employer: The work must be performed for a non-resident entity or for a permanent establishment located abroad.
• Physical displacement: The worker must travel outside of Spain and the workplace must be temporarily located outside the national territory.
• Tax treatment in the destination: In the country where the service is provided, a tax of an identical or analogous nature to IRPF must apply.
• Tax transparency: The destination country cannot be a tax haven, which is verified through the existence of an information exchange agreement with Spain.

The exemption will apply exclusively to the remuneration earned during the days of stay abroad, with a maximum limit of 60,100 euros per year.

What it means for you

If you are a worker who undertakes international travel, it is not enough to be outside of Spain to apply this exemption. It is essential to verify that the entity remunerating you meets the condition of being a non-resident or that the service is provided through a permanent establishment abroad. Likewise, the burden of proof regarding the location of the workplace and the nature of the tax in the destination country lies with the taxpayer.

What you should do

It is necessary to analyze the structure of the employing entity and the tax regulations of the country where the activity is carried out. Before applying the exemption in your tax return, you must confirm that the destination is not a low-tax territory and that the criteria for physical displacement and temporality are met. Each international mobility situation must be assessed individually to ensure compliance with the LIRPF and the RIRPF.