The Law that regulates Personal Income Tax (IRPF) aims to promote Spain as a country with international companies and with scientific investment and R & D, although not always. Among the modifications that were made years ago for companies to see globalization as an opportunity and a tool to grow was created article 7p of the IRPF.
This article includes the tax exemption for personal income tax (IRPF) for workers with payroll in a company resident in Spain that travel abroad to perform a job that is addressed to a company that does not reside in the Spanish State. Although this is nice, there are some indispensable requirements that we will see below.
Article 7p IRPF: Exemption requirements for work abroad
If, for now, you fulfil the fact of working in payroll by a company resident in Spain and you are going to carry out some type of work abroad for a non-resident entity, you must note that you also come within these requirements:
– Work performed abroad cannot exceed € 60,000 of remuneration.
– There must be an effective real displacement of the worker to the foreign country.
– In the country of displacement there must be a tax of the same nature or similar to that of this tax.
– The country of displacement cannot be a country or territory considered as a tax haven.
– In addition to working for a Spanish company, the person must be resident in Spain.
How does the exemption for work abroad apply?
It is important that, when moving a worker abroad, article 7p of the Income Tax is taken into account in the payroll and that the exemption is directly applied. If the employee applies it directly to the IRPF, he will surely have problems, since the declaration will not coincide with the fiscal data and will have a requirement of Treasury.
Also, you have to take into account some tips to make everything go well:
– It is necessary to keep the documents certifying the entry and exit of the country by the worker, such as airline tickets or visas.
– In the part of remuneration that is received in Spain will be made the corresponding withholding for the total of perceptions, not counting the exemption.
– The company must declare under the Key A of the Model 190 Summary of Withholdings the wages subject and under the key L Subkey 15 exempt wages.
Article 7p IRPF: Clarifying example
To see more clearly what it is that we are explaining, let’s give an example. It would be the case of a Spanish worker from a Spanish multinational who moves to China for 3 months to carry out a project for a Chinese entity. The salary you receive during those 90 days, if it is less than € 60,000, will be exempt from IRPF taxation thanks to article 7p.
The advantage obtained by applying this article is to encourage employees to accept work abroad, since without the withholding of income tax can earn more money than working in Spain. In this way, the fact of working away from home is somewhat offset.
If you are going to face some type of work abroad, you fulfil (or believe that you fulfil) the requirements that we have detailed in this post and you have doubts about the article 7p of the IRPF, consult us. At GM Tax we are specialists in this type of tax cases, we study your case in detail and we advise you with total professionalism and proximity.
