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A civil servant enquired whether the early retirement incentive offered by their local council allows for the application of the 30% reduction under Article 18.2 of the Personal Income Tax Law (LIRPF). The Directorate General for Taxes (DGT) ruled that this is possible provided two conditions are met: the income must be linked to a period of seniority in the company exceeding two years, and the agreement regulating it must also cover a period exceeding that timeframe.
This ruling clarifies the criteria for applying tax relief to early retirement incentives, specifically linking the benefit to the duration of the employment relationship and the governing collective agreement.
The tax team reviews your specific situation.
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