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V2501-17 5 October 2017 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del trabajo

Compensations for contract suspension are not eligible for tax exemptions or the 30% reduction

A worker requested clarification regarding the taxation of compensation received during a paid leave of absence. The DGT has ruled that these amounts constitute employment income and are not eligible for any tax exemptions or reductions due to irregularity.

The question raised

Classification and taxation of amounts received under Personal Income Tax.

The DGT's ruling

Compensations for the suspension of the employment relationship are earned income and do not benefit from the dismissal exemption because the suspension does not terminate the contract. Furthermore, the 30% reduction for irregular income acquisition does not apply, as the right arises from the agreement and not from the termination of the employment relationship. The reimbursement of the cost of a special agreement with the Social Security is full earned income.

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