Exemption from income TAX for Spanish Workers Abroad: How Does the Exemption for Work Outside of Spain?
What is the Exemption from income TAX for Workers in the Foreign countries?
Spanish workers who provide services outside of Spain can benefit from a significant tax exemption in the Tax on the Income of Natural Persons (personal income TAX), allowing to leave exempted up to 60.100 euros per year income earned abroad.
However, this Exemption of personal income TAX is not automatically applied to all workers, but that must be met certain requirements.
In this article, we will explain to you in detail the necessary conditions, how to calculate the amount exempt and how to apply it correctly on your tax return.
Requirements to Apply for the Exemption of income TAX (Art. 7.p LIRPF)
To qualify for the exemption from income TAX on work performed outside of Spain, it is necessary to fulfill two basic conditions:
1. Provision of Services Abroad
The worker must have played your activity outside of Spain in an effective way. This means that:
You must demonstrate the stay and work outside of the Spanish territory.
Do not apply if the work is performed in remote from Spain for a foreign company.
2. That the Company or Client you Are Abroad
To benefit from the exemption, the employer or the company that receives the service must:
Be a foreign entity or have international activity.
Not be located in a tax haven.
Be subject to a tax similar to the TAX in your country of residence.
Important: If you are self-employed and invoices to international customers, also you could take advantage of, but it is advisable to have a tax advisor to discuss your situation.
How Much Money Can I Exonerate?
The maximum limit exempt is 60.100 euros per year. However, the calculation is performed in function of days actually worked outside Spain:
How to Calculate the Exemption:
Annual gross salary ÷ Total days of the year × Days worked outside of Spain.
If the result exceeds the 60.100 €, you can only exempt up to the limit.
Practical Example
If a worker has a gross salary of eur 100,000 and has worked 100 days abroad:
To € 100,000 ÷ 365 days = 273,97 € per day.
273,97 € × 100 days = 27.397 € - exempt.
What Documentation do I Need to Justify the Exemption?
To avoid problems with the Treasury, it is essential to present evidence proving the stay and work abroad. Some useful documents include:
Employment contract with specification of the place of provision of services.
Payroll and bank transfers of the foreign company.
Plane tickets and stamps in your passport.
Agreements with international clients in the case of the self-employed.
Compatibility with Other Tax Regimes
It is important to note that this exemption it is not compatible with the regime excesses excluded from taxation. This means that the worker must choose between:
To apply the exemption in article 7.p (up to 60.100 € / year).
Eligible under the scheme of excesses, which allows to exclude from taxation certain wage concepts derived from the expatriation.
What Happens if the Treasury Rejected the Exemption?
If the Treasury considers that do not meet the requirements, you could:
Require the payment of personal income TAX is not paid, plus interest and penalties.
Make a tax inspection and request additional documentation.
Limit future applications for exemption if it detects irregularities.
To avoid these problems, it is key to have specialist advice before submitting the declaration.
Are you the Benefits of the Exemption from income TAX?
If you work abroad and you meet the requirements, the exemption of 60.100 euros per year you can save a significant amount of taxes. However, it is essential to apply the rules correctly and properly justify the stay outside of Spain.
Do you have questions about your tax situation as a worker in the foreign country? Contact us and we will help you to optimize your international taxation.
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