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V2293-18 7 August 2018 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · indemnización por despido

Exemption from redundancy pay depends on real and effective severance from the former employer

A query was raised regarding whether redundancy pay remains exempt if an individual is hired by a consultancy firm providing services to their former employer. The Directorate-General for Taxes (DGT) ruled that the exemption requires a real and effective severance, regardless of whether the presumption of affiliation applies.

The question raised

Tax treatment under Personal Income Tax (IRPF) of severance pay in the event of being hired by a company that provides services to the company that dismissed the worker.

The DGT's ruling

The exemption of severance pay is conditional upon the real and effective severance of the employment relationship between the worker and the company. Even if the provision of services is carried out for an entity different from the one that dismissed the worker, the application of the exemption remains subject to the existence of said real severance. The accreditation of this requirement is a matter of fact that may be proven by any valid means.

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