Article 7p: exemption for work carried out abroad

Are you Spanish, and are you going to work abroad? You may not know exactly what deductions exist when you file your income tax return. We tell you what the Article 7p exemption consists of, what requirements must be met and in which cases it applies.

It is increasingly common for employers to send their workers to carry out sporadic jobs abroad, but this may affect how they declare personal income tax, so it is necessary to know what happens in these cases. Let’s start by knowing where the Article 7p exemption is regulated.

Where is the 7p exemption regulated?

The regulation relating to the exemption of work carried out abroad is contained in article 7p of the Personal Income Tax Law, which establishes that their Income derived from work income received for work carried out abroad is exempt.

What requirements must be met for the 7p exemption to apply?

For the 7p exemption to be applied, a series of requirements must be met, such as the following:

• The worker must be a resident of Spanish territory, and the movements must be sporadic. A natural person is considered to be a resident in Spain when:
  • Stays more than 183 days a calendar year in Spanish territory.
  • The main nucleus or base of its activities or economic interests directly or indirectly resides in Spain.
  • The spouse not legally separated, and the minor children who depend on the natural person normally reside in Spain. In this case, proof to the contrary is admitted.
• The works must be carried out for a company or entity that is not resident in Spain or a permanent establishment located abroad.
• That a tax similar to Personal Income Tax is applicable in the territory where the work is carried out, and it is not a tax haven, this requirement is considered fulfilled when the country in which you work has signed a treaty with Spain to avoid international double taxation that contains an information exchange clause.

As for the exemption limit, it is 60,100 euros per year. In addition, we must know that the 7p exemption is incompatible, in the case of taxpayers assigned abroad, with the regime of excesses excluded from taxation regarding allowances for living expenses or stay.

As a consequence of the foregoing, before going to work abroad, you must consult the circumstances of your specific case and seek advice from an expert prosecutor on the best way to pay taxes and the tax implications of those who worked abroad.

In the case of companies that send employees to work abroad, it will be necessary for them to seek advice from a compliance officer so that all the necessary documents are compiled to prove that the requirements established by law are met…