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V1532-22 27 June 2022 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · indemnización por despido

30% reduction possible on fragmented dismissal payments under specific conditions

A worker asked whether a 30% reduction on irregular payments from a collective dismissal indemnity could be applied when paid over several years. The DGT clarifies that this is possible if the ratio of years of service to years of payment exceeds two.

The question raised

Tax treatment, under Personal Income Tax (IRPF), of severance pay for the termination of the employment relationship. Application of the provisions of Article 18.2 of the Tax Law.

The DGT's ruling

To apply the reduction provided in Article 18.2 of the Personal Income Tax Law (LIRPF) to installment-based severance payments, the quotient between the number of years of service and the number of tax periods of the installment plan must be greater than two. In the calculation of the installment plan, all fiscal years in which the severance is received must be included, including those that are exempt. As of 2015, the reduction is 30% with an annual limit of 300,000 euros upon which it is applied.

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