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V2594-14 3 October 2014 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del trabajo

40% reduction on employment income is not applicable without a generation period exceeding two years

A worker on partial retirement inquired whether monthly payments could benefit from the 40% reduction under Article 18.2 of the Personal Income Tax Act (LIRPF). The Directorate General for Taxes (DGT) ruled that this is not applicable, as the payments constitute monthly remuneration for services rendered and do not meet the requirement of a generation period exceeding two years.

The question raised

Application of the 40 percent reduction provided for in Article 18.2 of the Personal Income Tax Law to the amounts received by the taxpayer.

The DGT's ruling

The amounts received constitute income from employment pursuant to Article 17.1 of the Personal Income Tax Law (LIRPF). The 40% reduction provided for in Article 18.2 is not applicable because the income is not notoriously irregular and its acquisition is not linked to a generation period exceeding two years, as it concerns monthly remuneration for work performed.

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