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A company sought clarification on whether an exemption from redundancy pay remains valid after rehiring a worker shortly after their dismissal. The Directorate-General for Taxes (DGT) ruled that rehiring within less than three years creates a presumption that there was no real and effective termination of the employment relationship.
Companies must ensure that dismissals are genuine and effective to maintain tax exemptions on redundancy payments, as rehiring the same individual within a three-year window may trigger a presumption of continuity, potentially leading to tax liabilities.
The tax team reviews your specific situation.
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