One of the most valuable — and often misunderstood — tax benefits available to Spanish tax residents is the 7p exemption under the Spanish Personal Income Tax Law (IRPF).

This provision allows certain income earned from work carried out abroad to be exempt from Spanish taxation, offering a significant advantage to international professionals working cross-border.

In this post, we’ll go through what the 7p exemption is, who qualifies, how it works, and what you need to be aware of when applying it in your tax return.

What Is the Article 7p Exemption?

Article 7p of the Spanish Personal Income Tax Law (Ley del IRPF) states that income derived from work performed physically outside of Spain may be exempt from Spanish taxation, up to a maximum of €60,100 per year.

This exemption is intended to prevent double taxation and to encourage international mobility, especially for employees assigned abroad temporarily. It effectively allows you to exclude qualifying foreign-earned employment income from your Spanish tax base, significantly reducing your liability.

The exemption is optional — it must be actively applied during your tax declaration each year and properly documented. If done incorrectly or without sufficient proof, the Spanish Tax Agency (Agencia Tributaria) may challenge your exemption, leading to penalties or back taxes.

Who Can Benefit from the 7p Exemption?

To apply the exemption, you must:

• Be a Spanish tax resident.
• Be employed by a Spanish or foreign entity (but not self-employed).
• Carry out work physically outside of Spain.
• Perform work for the benefit of a company or entity based outside of Spain.
• The country where the work is carried out must have a tax similar to Spain’s personal income tax and not be considered a tax haven

.

You do not need to become a tax resident in the country where the work is performed — but you must prove that your work duties were carried out abroad.

How Much Is Exempt?

The exemption applies to up to €60,100 of employment income per calendar year. Any earnings above that amount are taxed under Spain’s regular progressive income tax rates.

If your work abroad is intermittent or seasonal, the exemption is applied pro rata based on the number of days spent working outside Spain. For example, if you spent 120 days abroad, approximately one-third of your annual salary may qualify for exemption (up to the maximum threshold).

This can result in significant savings, especially for employees with long-term or recurring international assignments.

Documentation and Proof

To successfully apply the 7p exemption and defend it in the event of an audit, it’s essential to keep detailed records. Common documentation includes:

• A certificate or letter from your employer confirming the assignment abroad.
• Details of the foreign company or client benefiting from your work.
• Boarding passes, flight records, accommodation receipts.
• Timesheets or reports that demonstrate the location and nature of the work.
• A work calendar that highlights foreign travel periods.
• Any applicable visas or work permits.

It’s important to remember that the burden of proof lies with the taxpayer. The Tax Agency may request verification that:

• The work was actually performed abroad.
• The receiving entity is not based in Spain.
• The foreign jurisdiction has a comparable income tax system.

If even one of these requirements is not met or substantiated, the exemption could be denied.

Common Mistakes to Avoid

• Assuming the exemption applies to remote work from Spain for a foreign company.
• Applying the exemption without sufficient documentation.
• Incorrectly calculating the amount that may be declared as exempt (you are not always entitled to the full €60,100).
• Using the exemption for work done in countries listed as tax havens.
• Trying to combine 7p with the Beckham Law (Regimen de Impatriados) — you cannot apply both regimes at the same time.

Always review your circumstances carefully and consult with a tax advisor before applying the exemption.

Review Your Case

If you are working abroad or planning international assignments while residing in Spain, there may be tax benefits such as the 7p exemption which you may be elegible for.

At SamirLaw, we advise clients on the correct application of tax exemptions such as 7p, helping them:

• Determine eligibility
• Collect supporting documentation
• Avoid incompatible tax regimes (like Beckham Law)
• File Modelo 100 with the exemption applied
• Respond to any queries from the Spanish Tax Agency

Contact us to schedule a consultation to discuss your options, or write to us at info@samirlaw.com