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A worker inquired whether compensation received through a mutual agreement early retirement scheme was exempt from redundancy tax and if the reduction for irregularity could be applied. The Directorate General for Taxes (DGT) ruled that the exemption does not apply as it is neither a collective redundancy nor legally established, and the reduction is inapplicable because the income is not attributed to a single tax period.
This ruling clarifies that settlements reached through mutual agreement do not benefit from the same tax advantages as formal redundancies, particularly regarding tax exemptions and the specific reduction for irregular income if the payments span different tax years.
The tax team reviews your specific situation.
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