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V0315-20 11 February 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del trabajo

30% reduction applicable to compensatory payment for loss of loyalty bonus under certain conditions

A query was raised regarding whether the compensatory payment resulting from the termination of a loyalty bonus in a private education collective agreement qualifies for the 30% Personal Income Tax (IRPF) reduction. The Directorate General for Taxes (DGT) has ruled that it is applicable, provided specific requirements regarding seniority and the period of generation are met.

The question raised

Taxation of the compensatory payment under Personal Income Tax (IRPF).

The DGT's ruling

The compensatory payment is income from employment and may qualify for the 30% reduction under Article 18.2 of the Tax Law if there is a generation period exceeding two years. To this end, the dual condition must be met that the income is linked to a period of service with the company of at least two years and that the collective agreement establishing it also exceeds said period. In this case, as it is an economic translation of a bonus already existing in previous agreements, it is considered that the requirement of a generation period exceeding two years is met.

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