Income generated in Spain by a Chilean company through teleworking

Tax implications for foreign companies generating income in Spain through teleworking. The Directorate General of Taxes has established clear criteria on how this income will be taxed for a tax resident in Chile who works remotely from Spain for a Chilean company.

The Directorate General of Taxes (DGT V3328/2023 of 28/12/2023) has established that income obtained in Spain in the form of teleworking by a tax resident in Chile will be taxed in Chile as the state of residence, provided that the worker does not remain in Spain for a period not exceeding 183 days in any twelve-month period beginning or ending in the year under consideration, that the remuneration is paid by an employer resident in Chile and that it is not borne by a permanent establishment in Spain. In the specific case of a worker with tax residence in Chile who moves to Spain in October 2023 to telework for a Chilean company, the DGT has determined the following:

1. Income earned in 2023 from work performed from Spain may be taxable in both Spain and Chile, unless certain conditions are met. In particular, income can only be taxed in Chile if the worker does not stay in Spain for more than 183 days in any twelve-month period beginning or ending in the tax year 2023, and if the remuneration is paid by an employer resident in Chile and is not borne by a permanent establishment in Spain.
2. For the computation of the 183-day period, all possible consecutive twelve-month periods should be considered, excluding the days in which the taxpayer is resident in the source state. In this case, the days that the worker remains in Spain during 2024 should not be counted. If all these conditions are met, the income obtained from work performed in Spain in 2023 will be taxable only in Chile. Otherwise, Spain may tax this income as the source state.