Skip to content
Back to index
V1139-24 23 May 2024 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del trabajo

30% tax reduction inapplicable if mutual agreement severance is paid across multiple tax years

A worker inquired whether severance pay for early retirement could be classified as income obtained in a notoriously irregular manner. The Directorate General for Taxes (DGT) ruled that, although this concept is included in the regulations, the reduction cannot be applied because the payments are not attributed to a single tax period.

The question raised

Whether the 30 percent reduction provided for in Article 18.2 of the LIRPF is applicable to the compensation received upon reaching 63 years of age.

The DGT's ruling

Amounts resulting from the mutual agreement to terminate an employment relationship are considered income obtained in a notoriously irregular manner over time. However, to apply the 30% reduction provided for in Article 18.2 of the Personal Income Tax Law (LIRPF), it is an indispensable requirement that such income be attributed to a single tax period. As monthly payments and an accession premium are agreed upon, this requirement of single attribution is not met.

Book your free first meeting