This resolution of the TEAC provides clarity on the tax situation of workers who carry out their work abroad and establishes that the income generated by such work must be treated in accordance with the legislation in force in the country where the professional activity is carried out.
The case in question involves an individual whose tax residency is under debate. Under Spanish law, to be considered a tax resident in Spain, one must comply with the core or main base of activities or economic interests rule established in the Personal Income Tax Law (LIRPF) in its article 9.1.b.
In his defense, the taxpayer argued that he spent more than 183 days outside Spain and that his main income comes from his work abroad. In addition, being single, the presumption of habitual residence of the spouse and minor children established in the law does not apply.
However, the Administration held that the taxpayer was resident in Spain since he owned a property in Spanish territory and had a participation in a national company, even though he did not generate income from both. In addition, the payer of the income had tax residence in Spain, and the taxpayer could not prove his tax residence in the country where he carried out his work.
However, the LIRNR establishes that, if the work is carried out entirely abroad, the income must be computed as obtained in the country where the work activity is carried out (LIRNR art.13.1.c). Therefore, in this specific case, the income paid by the paying entity, despite being resident in Spain, is not subject to taxation in Spanish territory under the Non-Resident Income Tax (IRNR).
This resolution of the TEAC provides clarity on the tax situation of employees working abroad and establishes that the income generated by such work must be treated in accordance with the legislation in force in the country where the professional activity is carried out.
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