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V2124-20 25 June 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · convenio especial

Employer contributions to special agreements are not subject to Income Tax for the employee

An employee inquired whether payments made by their company towards social security special agreement contributions following a collective redundancy should be taxed. The Directorate General for Taxes (DGT) ruled that if the employer bears the cost by law, there is no tax implication for the employee.

The question raised

Tax treatment, under Personal Income Tax (IRPF), of the special agreement with the Social Security.

The DGT's ruling

The contributions to the special agreement corresponding to the employer, due to the worker being under 63 years of age (or 61 for economic reasons), are neither income nor deductible expenses for Personal Income Tax (IRPF) purposes. If the obligation to pay fell upon the worker and the company financed it, it would be considered employment income without any applicable exemptions or reductions. In that case, the worker could subsequently deduct it as an expense pursuant to Article 19.2 a) of the LIRPF.

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