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A retiree inquired whether an 180,000 euro compensation received following a judicial settlement with their company could benefit from the reduction under Article 18.2 of the Personal Income Tax Act (LIRPF). The Directorate General for Taxes (DGT) ruled that it is not applicable because the amount does not stem from a pension commitment nor was it generated over a period exceeding two years.
This ruling clarifies that settlement agreements do not automatically qualify for the 30% tax reduction on employment income, reinforcing strict requirements regarding the nature of the payment and its generation period.
The tax team reviews your specific situation.
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