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V2455-22 30 November 2022 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del trabajo

Severance payments following an employee's death are subject to Inheritance Tax

A widow has requested clarification on the tax treatment of income from a collective redundancy agreement following her husband's death. The DGT has determined that income accrued up to the date of death constitutes employment income of the deceased, whereas subsequent payments are assets subject to Inheritance Tax.

The question raised

The tax treatment to be applied to the amounts received by the deceased husband of the applicant, and by the latter following the death of the former during the term of the employment relationship termination agreement.

The DGT's ruling

The monthly amounts paid to the employee prior to death constitute employment income for Personal Income Tax purposes. The amounts received by the heirs following the death, pursuant to the termination agreement, are successor titles subject to Inheritance and Gift Tax. Personal Income Tax withholdings apply only to the employment income of the deceased, not to the benefits received by the heirs.

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