The Directorate General of Taxes (DGT) has issued binding consultation V0416-25, addressing key aspects of the application of the exemption provided for in Article 7p of the Personal Income Tax Law on income obtained from work actually performed abroad.
The consultant, due to an employment relationship with a Belgian entity, travels 10 days a month to Brussels, as well as to other European countries. He requests whether he qualifies for the exemption provided for in Article 7p of the Personal Income Tax Law.
To determine that the work was actually performed abroad, both the employee must have traveled outside of Spanish territory and the workplace must be located, at least temporarily, outside of Spain.
Another requirement is that the work be performed for a company or entity not resident in Spain. In particular, when the entity receiving the work is linked to the employee’s employer or to the entity where the employee provides services, the work will be deemed to have been performed for the non-resident entity when it can be considered that an intragroup service has been provided to the non-resident entity because the service produces or could produce an advantage or benefit to the recipient entity (evidence of this is the re-invoicing of the services provided by the employee, or proof of a real economic advantage for the non-resident entity).
In the consultation, the DGT analyzes whether the requirements are reliably met and concludes that the fact that the employee provides services abroad for 10 days each month does not actually determine who is the beneficial owner of their work abroad (which must be a non-resident entity located abroad).
Therefore, to meet this last requirement, it must be proven that the service provided provides an advantage or benefit to one or more non-resident entities located abroad. Traveling abroad is not sufficient.
The DGT also clarifies that it is not necessary for employment income to have been taxed abroad; the requirement is that a similar tax exists in the territory of transfer and that the territory is not classified as a tax haven or non-cooperative jurisdiction.
This statement is especially relevant in reference to explicit compliance with the requirements for applying the exemption provided for in Article 7p of the Personal Income Tax Law.
The binding consultation can be consulted in full in the Directorate General of Taxes database V0416-25.
At Feliu N&I, we specialize in advising on this topic and assist our clients with the 7p strategy and documentation protocol.
