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A worker inquired whether severance pay for early retirement could be classified as income obtained in a notoriously irregular manner. The Directorate General for Taxes (DGT) ruled that, although this concept is included in the regulations, the reduction cannot be applied because the payments are not attributed to a single tax period.
This ruling limits the tax benefits for employees receiving severance packages spread over several years, as the 'notoriously irregular income' reduction requires the entire amount to be recognised within a single tax year.
The tax team reviews your specific situation.
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