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V1682-24 10 July 2024 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
ISD · rendimientos del trabajo

Compensation received by heirs following an employee's death is subject to Inheritance Tax

A query was raised regarding the taxation of redundancy payments that an employee was entitled to but had not yet received before their death, which were subsequently collected by their heirs. The Directorate General for Taxes (DGT) has ruled that these amounts must be taxed under Inheritance and Gift Tax.

The question raised

Taxation of the aforementioned amounts.

The DGT's ruling

The amounts that the financial institution must pay to the heirs following the death of the employee constitute a succession right. Therefore, amounts whose exigibility is subsequent to the death must be taxed exclusively under the Inheritance and Gift Tax, pursuant to Articles 10.1.a) and 11.c) of the Regulations of said tax.

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