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V1829-24 1 August 2024 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · indemnización

Only the compensation for substantial modification complying with the Workers' Statute is exempt

The inquirer asks about the tax treatment of compensation received for terminating their contract following a substantial modification of working conditions. The DGT rules that only the amount mandatorily established by the Workers' Statute is exempt, subject to a limit of 180,000 euros.

The question raised

Tax treatment under Personal Income Tax.

The DGT's ruling

Severance payments resulting from the termination of the employment relationship constitute earned income. In cases of substantial modification of working conditions (Art. 41 of the Workers' Statute), the portion of the severance payment that does not exceed the amount mandatorily established in the Workers' Statute shall be exempt, up to a limit of 180,000 euros. Any amount exceeding said limit shall be subject to taxation. The excess severance payment may qualify for the 30 percent reduction if received as a lump sum and the generation period exceeds two years, subject to an annual limit of 300,000 euros.

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