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A worker enquired whether the financial compensation received for a non-compete clause following dismissal could benefit from the 40% tax reduction. The Directorate General for Taxes (DGT) ruled that it is not applicable, as it does not constitute notoriously irregular income nor does it have a generation period exceeding two years.
This ruling clarifies that non-compete payments do not qualify for the special tax reduction reserved for irregular income, affecting how such compensation is taxed for employees.
The tax team reviews your specific situation.
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