Skip to content
Back to index
V1254-24 31 May 2024 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · indemnización

Compensation for contract termination due to substantial changes in working conditions may be tax-exempt

A query was raised regarding whether compensation received by a worker who chooses to terminate their contract due to a substantial modification of their working conditions may be exempt from Personal Income Tax (IRPF). The Directorate General for Taxes (DGT) has ruled that such exemption is possible within certain limits.

The question raised

Whether the exemption provided for in Article 7 e) of the LIRPF is applicable to the compensation received due to the termination of the employment relationship by the worker's will as a consequence of the substantial modification of working conditions.

The DGT's ruling

The compensation for the termination of the employment relationship by the worker's will due to substantial modifications of working conditions is exempt pursuant to Article 7 e) of the LIRPF. This exemption applies provided that the amount and the compensable situation comply with the provisions of Articles 41 and 50 of the Workers' Statute, with a limit of 180,000 euros.

Book your free first meeting