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V0999-20 22 April 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del trabajo

30% reduction may apply to 40-year service award subject to specific requirements

A municipal employee inquired whether the 40-year service award qualifies for the 30% reduction for income generated over a period exceeding two years. The Directorate-General for Taxes (DGT) ruled that it is applicable provided the minimum period of service is met and the collective agreement regulating the award has been in effect for more than two years.

The question raised

Application of the reduction under Article 18.2 of Law 35/2006.

The DGT's ruling

To apply the 30% reduction for a generation period exceeding two years, it is required that the yield be linked to a period of seniority in the company of at least that period and that the agreement or pact establishing it also exceeds two years. In this case, if the award for 40 years of service is received in a single tax period and the previous agreement included the same regulation for more than two years, the reduction is applicable. Notwithstanding, the amount limits and the restriction of not having applied the reduction to other similar yields in the previous five tax periods must be respected.

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