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V0293-25 17 March 2025 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos de actividades económicas

Commercial contract termination indemnity does not allow 30% IRPF reduction

A commercial agent asks whether indemnity from unilateral commercial contract termination qualifies for the irregular income reduction. The DGT states it must be taxed as business income without entitlement to such reduction.

The question raised

Taxation of the compensation received by the taxpayer under Personal Income Tax.

The DGT's ruling

The compensation for the termination of a commercial relationship must be included as income from economic activity. The 30 percent reduction provided in Article 32.1 of the Personal Income Tax Law (LIRPF) is not applicable because the compensation is not generated for a period exceeding two years, nor does it qualify as income obtained in a notoriously irregular manner. It is not considered irregular income since it does not derive from the cessation of activity, but rather from the termination of a contract.

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