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V0874-19 24 April 2019 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · indemnización por despido

Severance pay is exempt up to the limits of the Workers' Statute and €180,000

The taxpayer inquires about the tax treatment of severance pay in a business subrogation scenario. The DGT clarifies that the exemption applies according to the legal limits set by the Workers' Statute and a cap of €180,000, with total seniority being calculated in the event of subrogation.

The question raised

Tax treatment of severance pay from the new company. Seniority.

The DGT's ruling

Severance pay is exempt up to the amount established by the Workers' Statute, with a maximum limit of 180,000 euros. In cases of business subrogation, to calculate years of service, both the time worked for the new company and the former company must be computed. Amounts exceeding the exempt limit are taxed as employment income, and the 30% reduction may be applied if the requirements of the Personal Income Tax Law (LIRPF) are met.

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