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A self-employed individual, following a dismissal, inquired whether the amount obtained through a judicial conciliation is tax-exempt. The DGT ruled that, as the proceedings recognised an employment relationship, the income constitutes employment income and does not qualify for exemption since the unfairness of the dismissal was not formally recognised.
This ruling clarifies that judicial settlements resulting from the recognition of an employment relationship, rather than a formal finding of unfair dismissal, are subject to income tax as employment income.
The tax team reviews your specific situation.
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