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V0426-22 3 March 2022 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · extinción de relación laboral

Mutual agreement settlements and Social Security special agreements are taxed as employment income

A taxpayer inquired whether payments received due to the termination of their employment by mutual agreement and payments made under a Social Security special agreement were exempt or eligible for a tax reduction. The DGT ruled that these must be taxed as employment income and that the 30% reduction does not apply as they are not attributed to a single tax period.

The question raised

Taxation under Personal Income Tax of the amounts received by the taxpayer

The DGT's ruling

Amounts resulting from mutual agreement resolutions do not benefit from the exemption provided in Article 7 e) of the Personal Income Tax Law (LIRPF) and are taxed as income from employment. The 30% reduction under Article 18.2 of the LIRPF is not applicable because the income is not imputed to a single tax period. The payment of contributions for the special agreement with the Social Security by the company constitutes income from employment, although the employee may deduct said amount as an expense.

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