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V1659-17 27 June 2017 · SG de Tributación de las Operaciones Financieras Criterion in force
IRPF · indemnización por despido

Payments for 'Dedication Awards' do not qualify for dismissal exemptions or irregular earnings reductions

A worker inquired whether additional payments under a pre-retirement agreement for a 'Dedication Award' were exempt as dismissal compensation and whether the reduction for irregular earnings applied. The DGT ruled that these are not exempt compensations and, as they are benefits from a collective insurance scheme, the 30% reduction cannot be applied.

The question raised

1. Whether said amount forms part of the severance pay and, therefore, is subject to the exempt limit established in Article 7 of Law 35/2006.

The DGT's ruling

The additional amount for 'Dedication Bonus' is not computed as severance pay, and therefore the exemption under Article 7.e) of the LIRPF does not apply. As these constitute benefits from a collective insurance scheme implementing pension commitments, they are classified as employment income pursuant to Article 17.2.a).5ª. Consequently, these earnings are excluded from the 30% reduction for irregular income provided for in Article 18 of the LIRPF.

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