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A local council has requested clarification on whether the early retirement incentive for employees with over five years of service allows for the reduction under Article 18.2 of the Personal Income Tax Law (LIRPF). The Directorate General for Taxes (DGT) has ruled that it is applicable provided the income has a generation period exceeding two years and the reduction has not been applied in the previous five tax periods.
This ruling clarifies the tax treatment of early retirement incentives, confirming that they qualify for the irregularity reduction if specific temporal and frequency requirements are met.
The tax team reviews your specific situation.
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