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V0587-25 1 April 2025 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del trabajo

Mutual agreement indemnity not exempt and must be charged to a single tax period

The taxpayer asks whether a mutual agreement settlement from the termination of a labour relationship can benefit from the 30% reduction under article 18.2 of the LIRPF for irregularities. The DGT replies that article 7 e) does not apply and that the 30% reduction is only possible if the income is charged to a single tax period.

The question raised

Possibility of applying the reduction provided for in Article 18.2 of the Personal Income Tax Law to the compensation received due to the mutual agreement termination of the employment relationship. If affirmative, whether the 300,000 euro limit is annual or a one-time limit.

The DGT's ruling

The mutual agreement termination of the employment relationship is characterized as employment income and does not allow for the exemption under Article 7 e) of the Personal Income Tax Law (LIRPF). To apply the 30% reduction for income obtained in a notoriously irregular manner, pursuant to Article 12 of the Tax Regulation, the amounts paid by mutual agreement must be attributed to a single tax period. Since they are not attributed to a single period, the reduction under Article 18.2 LIRPF is not applicable.

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