Income Declaration for the Period 2023
April 16, 2024
If you’re an international company with employees in Spain, it’s crucial to be familiar with the tax laws that affect your business operations. One essential aspect to consider is the tax exemption for earned income received for work effectively carried out abroad.
This exemption is regulated through Law 40/1998 and other tax regulations aimed at promoting the competitiveness of Spanish companies and the internationalization of human capital resident in Spain.
To qualify for the tax exemption, there are two fundamental requirements to meet.
Firstly, the work must be done abroad, not in Spain, and the place of work must be outside Spain, even if it is temporary.
Secondly, the recipient or beneficiary of the job offered by the worker sent from Spain must be a non-resident company or entity or a permanent establishment abroad.
If the entity accepting the work is linked to the worker’s employer or the entity with which the worker provides services, the work is deemed to be for a non-resident entity.
An intragroup service may be considered as provided to a non-resident entity since the services create or are likely to create an advantage or benefit for the recipient entity.
However, it’s essential to note that part of the intra-group services performed abroad corresponding to services provided to Spanish entities would not be considered work performed for a company or entity not domiciled in Spain.
Therefore, such services would not fall within the scope of the exemption application.
If you’re an international company with employees in Spain, understanding the tax exemption for earned income received for work effectively carried out abroad is vital.
This exemption helps you reduce the tax burden associated with your business operations in Spain, which increases your competitiveness and internationalization.
At Employing In Spain, we understand the importance of tax exemptions for international companies with employees in Spain. We have professionals ready to offer expert advice on labor and employment matters to help you meet your employment goals and objectives.
If you need assistance with your business operations in Spain, please don’t hesitate to contact us and schedule your appointment today.
