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V1795-18 21 June 2018 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · indemnización por despido

Compensation for contract termination under Article 50 of the Workers' Statute is exempt from Personal Income Tax (IRPF)

A taxpayer inquired whether compensation agreed upon through a conciliation agreement for contract termination under Article 50 of the Workers' Statute is exempt from Personal Income Tax (IRPF). The Directorate General for Taxes (DGT) confirmed that it is exempt income, subject to the established legal limits.

The question raised

Exemption from Personal Income Tax (IRPF) on compensation.

The DGT's ruling

The compensation received under Article 50 of the Workers' Statute is considered exempt income for Personal Income Tax (IRPF) purposes. The exempt amount is limited to the lesser of: the amount mandatorily established in the Workers' Statute for unfair dismissal or the amount of 180,000 euros.

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