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V4664-16 ·3 November 2016 ·consulta-vinculante Medium impact
Tax

Severance pay may lose tax exemption if re-employed by the same or related company

A worker inquired whether their severance pay would retain its Income Tax (IRPF) exemption after receiving a job offer at an overseas plant owned by the same multinational. The Directorate General for Taxes (DGT) explains that a presumption exists that no real severance of employment has occurred if the individual returns to work for the same company or a related entity within the following three years.

In 5 key points

How it affects those involved

This ruling clarifies that tax exemptions on redundancy payments are conditional on a genuine termination of the employment relationship, impacting workers moving between entities within the same corporate group.

Lifecycle

2016-11-03PublishedPublished in the BOE
Official text Based on BOE data (boe.es). Information, not advice.

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This analysis is informational only and does not constitute legal advice or create a client-adviser relationship. BM Consulting.
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