Skip to content
Back to index
V2209-20 30 June 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · indemnización por despido

Dismissal compensation exempt up to Workers' Statute or €180,000, whichever is lower

A worker inquired about the tax treatment of a collective dismissal payment received in installments. The DGT clarifies that the exempt amount is subject to legal limits, and any excess is treated as income from work, potentially eligible for a 30% reduction if certain conditions are met.

The question raised

Tax treatment, under Personal Income Tax (IRPF), of the compensation for the termination of the employment relationship. Application of the provisions of Articles 7 e) and 18.2 of the Tax Law.

The DGT's ruling

The compensation for collective dismissal is exempt up to the lesser of: the mandatory amount under the Workers' Statute for unfair dismissal or 180,000 euros. The excess is taxed as employment income and a 30% reduction may apply if the ratio between the generation period and the installment periods is greater than two. In the case of installment payments, all tax periods in which the compensation is received are computed, including years with a partially exempt amount.

Book your free first meeting