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V0667-20 ·2 April 2020 ·consulta-vinculante Medium impact
Tax

30% tax reduction cannot be applied to compensation for lack of notice

A query was raised regarding whether compensation for lack of notice paid to a senior executive allows for the 30% reduction under Article 18.2 of the IRPF Act. The Directorate General for Taxes (DGT) ruled that it is not applicable, as it does not constitute redundancy pay nor does it involve a generation period exceeding two years.

In 6 key points

How it affects those involved

This ruling clarifies that compensation for lack of notice is treated as standard employment income rather than redundancy pay, preventing taxpayers from accessing the preferential tax reduction for long-term generation periods.

Lifecycle

2020-04-02PublishedPublished in the BOE
Official text Based on BOE data (boe.es). Information, not advice.

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This analysis is informational only and does not constitute legal advice or create a client-adviser relationship. BM Consulting.
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