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V2413-17 27 September 2017 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos de actividades económicas

30% reduction for irregular income not applicable to agency contract termination compensation

A commercial agent inquired whether the compensation received for the termination of their mediation services contract could benefit from the 30% reduction applicable to irregular income. The Directorate General for Taxes (DGT) ruled that this reduction does not apply.

The question raised

Application of the 30 percent reduction provided for in Article 32.1 of the Personal Income Tax Law to the aforementioned compensation.

The DGT's ruling

Compensation for the termination of an agency contract constitutes income from economic activity subject to Personal Income Tax (IRPF). The 30% reduction is not applicable because the compensation is not generated for a period exceeding two years, but rather due to the act of termination, nor does it qualify as notoriously irregular income, as it does not result from the cessation of activity nor does it substitute economic rights of indefinite duration.

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