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V0037-25 15 January 2025 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · indemnización por despido

Dismissal compensation exempt up to unfair dismissal limit and 180,000 euros

The consultant asks about the taxation and withholding of monthly collective dismissal compensation. The DGT responds that the exempt amount is capped by the Workers' Statute limits for unfair dismissal and a 180,000 euro ceiling.

The question raised

Question raised: Taxation of severance pay, and whether the company must apply withholding on the amounts paid.

The DGT's ruling

In collective dismissals due to economic, technical, organizational, production, or force majeure reasons, the severance pay is exempt up to the limit established for unfair dismissal and up to a maximum of 180,000 euros. The excess over these limits is considered earned income subject to withholding according to the general procedure. The unfair dismissal limit depends on the date of the contract execution pursuant to the Workers' Statute.

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