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V1680-23 13 June 2023 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · indemnización por despido

Compensation for objective dismissal is exempt up to the limit of unfair dismissal and 180,000 euros

The taxpayer inquires about the taxation of an improved severance payment received following an objective dismissal and a judicial settlement. The DGT clarifies which portion of the compensation is exempt and how the reduction for irregular income is applied.

The question raised

Question posed: Taxation of the compensation received by the taxpayer.

The DGT's ruling

Compensation for objective dismissal is exempt in the amount that does not exceed the lesser of: the limits for unfair dismissal according to the Workers' Statute (33 days per year with a maximum of 24 monthly payments for contracts after February 2012) and 180,000 euros. The excess is considered income from employment. A 30% reduction for irregular income may be applied under the limits and conditions of the LIRPF.

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