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A query was raised regarding whether compensation for total permanent disability due to common illness, paid by a local council, is exempt from Personal Income Tax (IRPF). The Directorate General for Taxes (DGT) ruled that it is not exempt income, but rather employment income subject to a reduction for irregularity.
This ruling clarifies the tax treatment of disability payments from public entities, confirming they are taxable as employment income but eligible for specific tax relief due to their irregular nature.
The tax team reviews your specific situation.
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