Workers abroad must prove the non-residency of the employing entity

The application of the exemption for work performed abroad in Personal Income Tax (IRPF) is subject to strict compliance with requirements regarding the nature of the employing entity and the location of the activity. The Dirección General de Tributos (DGT) has specified the necessary criteria so that these earnings are not taxed in Spain.

What the DGT has resolved

In accordance with current regulations, to benefit from the exemption provided for in article 7 p) of the IRPF Law, the following provisions must be met simultaneously:

• Effectiveness of the activity: The work must be effectively performed abroad.
• Nature of the entity: The activity must be provided to an entity that is not a resident in Spain or to a permanent establishment located abroad.
• Conditions of the destination country: In the event of working in several countries, it must be verified that an analogous tax exists in each of them and that the territory is not considered a tax haven.
• Economic limits: The exemption applies exclusively to 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 professional carrying out your activity in different countries, the tax residence of the entity paying you is the determining factor. It is not enough to physically travel outside of Spain; it is imperative that the entity receiving the services does not have tax residence in Spanish territory or acts through a permanent establishment abroad. If the employing entity is a resident in Spain, the exemption will not be applicable, regardless of the physical location of the worker.

What should be done

It is necessary to verify the tax residence of the employing entity and the existence of an analogous tax in each of the countries where the service is provided. Since the exemption is calculated based on the days of effective stay, rigorous control of presence abroad is required to avoid errors in the IRPF tax return. Each situation of international mobility must be analyzed to confirm that all requirements of the IRPF Law and its Regulations are met.