Tax Exemptions for Posted Workers

The assignment of employees abroad can have significant labor, tax, and organizational implications for both the company and the employee. One of the most important issues—when an employee maintains their tax residence in Spain and performs actual work outside Spanish territory—is the possible application of the tax exemption provided for in Article 7(p) of Law 35/2006 on Personal Income Tax.

This publication began as a brief guide on the international posting of workers and the associated tax exemptions. It is now necessary to expand it to explain more clearly what requirements must be met, what documentation is recommended to keep on file, and what mistakes could prevent the application of the exemption for work actually performed abroad.

2026 Update: What a Company or a Seconded Employee Needs to Know

In 2026, the exemption for work performed abroad remains an important tool for workers who are tax residents of Spain and who temporarily travel outside the country to provide services. However, its application is not automatic: it requires a review of the specific case, the actual circumstances of the assignment, the actual recipient of the work, and the documentation supporting each assignment.

The Tax Agency distinguishes this exemption from other regimes applicable to seconded employees, such as tax-exempt per diems and expenses or the excess income regime for assignments abroad. Therefore, before applying the tax benefit, it is advisable to verify which provision actually applies to the employee’s situation.

For companies with international operations, corporate groups, or teams that provide services outside of Spain, the analysis must be coordinated with the company’s labor, tax, and documentation policies. In these cases, it may be helpful to seek advice on labor law and Social Security, as well as legal support for transactions with an international component through IN DIEM’s international law practice.

What Is the Exemption for Work Performed Abroad?

The exemption provided for in Article 7(p) of the Personal Income Tax Law allows certain employment income received for work actually performed abroad to be exempt from taxation in Spain, provided that the applicable legal and regulatory requirements are met.

The maximum exemption limit is 60,100 euros per year, as established by current regulations. This limit must be applied and the exempt income calculated in accordance with the rules set forth in the Personal Income Tax Law and Article 6 of the Personal Income Tax Regulations.

This system allows certain types of employment income to be declared tax-exempt when the requirements set forth in the Personal Income Tax Law and its Regulations are strictly met. However, it is not sufficient for the company to engage in international business or for the employee to travel abroad: it must be proven that the work was actually performed outside Spain and that it meets the requirements set forth in the law.

Main Requirements for the Exemption Under Article 7(p) of the Personal Income Tax Act

Applying the exemption requires a comprehensive analysis of several requirements. Generally speaking, the following conditions must be met:

• The employee must be a personal income tax payer in Spain. The exemption is intended for workers who are tax residents of Spain and who receive income from employment for services performed abroad.
• The work must actually be performed abroad. There must be an actual relocation outside of Spain and the actual provision of services in the destination country.
• The work is performed for a company or entity that is not resident in Spain or for a permanent establishment located abroad. In corporate groups, special care must be taken to analyze who actually benefits from the service.
• There must be a tax in the territory where the work is performed that is identical or analogous to personal income tax. The regulations do not necessarily require the employee to actually pay taxes there on that income, but they do require compliance with the legal requirement regarding the analogous tax.
• The country or territory of destination must not be considered a non-cooperative jurisdiction under the applicable terms. This verification must be conducted with due care and in accordance with the regulations in effect at any given time.
• The annual limit of 60,100 euros must be respected. The exemption does not apply to any amount received by the employee, but only to the amount due in accordance with the regulation and within that limit.

Furthermore, for the same income, the exemption is incompatible with the tax-exempt excess income regime provided for employees stationed abroad. Therefore, it is necessary to determine which regime is applicable and most appropriate in each case, without duplicating tax benefits on the same income.

Special attention to international groups

When an employee is transferred within a corporate group, the review must be particularly thorough. It is not enough for there to be a foreign company within the group: it must be demonstrated that the services provided generate a benefit or profit for the nonresident entity or for the permanent establishment located abroad.

This issue is often relevant when executives, technical staff, internal consultants, sales teams, or professionals who provide support to foreign subsidiaries are sent on business trips. In these cases, contractual documentation, work reports, and the financial justification for the service can be decisive.

What Documents Should You Keep?

The proper application of the exemption depends largely on the evidence. Therefore, both the company and the employee should retain sufficient documentation to substantiate the business trip, the days worked abroad, and the actual recipient of the services.

• Employment contract, relocation appendices, international assignment letter, or travel instructions.
• Airline tickets, transportation reservations, boarding passes, proof of lodging, and other documents proving physical presence abroad.
• Calendar of days worked outside Spain, distinguishing between travel days, actual work days, rest days, and vacation days as necessary.
• Activity reports, professional emails, meeting schedules, meeting minutes, deliverables, or technical documentation that verifies the work performed.
• Identification of the foreign company, nonresident customer, or permanent establishment receiving the service.
• Intragroup invoices, service agreements, contracts with foreign clients, or documentation demonstrating the value of the work to the nonresident entity.
• Pay stubs, withholding certificates, and an internal calculation of the portion of compensation that is intended to be considered exempt.

A proactive record-keeping policy reduces the risk of future disputes with the tax authorities. For companies where employees travel frequently, it is advisable to establish an internal procedure to collect this information from the outset, rather than waiting until the income tax return is being prepared.

Common Mistakes to Avoid

The exemption for work abroad can lead to disputes if it is applied without sufficient prior review. Among the most common mistakes are the following:

• Apply the exemption for simple business trips without proving that actual work was performed abroad for a nonresident entity or a foreign permanent establishment.
• Do not distinguish between travel, international assignments, per diem, and the excess allowance system. Each entity has different tax requirements and implications.
• Failure to keep sufficient records of the days worked outside Spain. The calculation must be supported by objective documentation.
• Apply the limit of 60,100 euros without an individualized calculation. The exempt amount must be determined in accordance with legal and regulatory rules, not automatically.
• Confusing the existence of a foreign subsidiary with compliance with the requirement regarding the recipient of the work. In the case of international groups, the actual benefit of the service to the foreign entity must be demonstrated.
• Failure to coordinate between the company and the employee. Salary, employment, and documentation information must be consistent to avoid contradictions.

It is also advisable to review the situation when an employee works in multiple countries, when part of the work is performed remotely from Spain, or when there are variable compensation payments, bonuses, per diems, or other forms of compensation that may require different tax treatment.

How IN DIEM Abogados Can Help

At IN DIEM Abogados, we can review the specific situation of a posted worker or the company organizing international postings, assessing the applicable regulations, the available documentation, and the associated tax and labor risks.

The analysis may include a review of contracts, travel orders, pay stubs, withholding certificates, travel documentation, relationships with foreign subsidiaries or clients, and the criteria for calculating potentially exempt income. When a company operates in multiple countries or is undergoing internationalization, it may also be advisable to coordinate the review with the corporate and business advisory department.

If you need an initial assessment without having to come in person, you can request an online consultation with IN DIEM attorneys to review the basic documentation and determine which aspects should be examined before applying the exemption on your income tax return or in the company’s compensation policy.