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An entity has requested clarification on whether it must withhold income tax (IRPF) when paying a severance settlement to a director following a court ruling. The Directorate General for Taxes (DGT) has ruled that such payments constitute employment income and are therefore subject to withholding.
Companies must ensure that severance payments made to directors, whether via settlement or court order, are treated as employment income for tax withholding purposes.
The tax team reviews your specific situation.
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