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V2612-17 13 October 2017 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del trabajo en especie

Collective redundancy insurance premiums may be exempt up to the legal severance limit

The inquirer asks about the tax treatment of an insurance premium paid by a company following a collective redundancy, as well as the subsequent monthly income. The DGT clarifies that the premium may be exempt up to the limit of the legal compensation for unfair dismissal, and that the monthly income is taxed as employment income.

The question raised

Tax treatment of the compensation for dismissal paid. Application of the exemption for compensation derived from dismissals, as well as the application of the 30 percent reduction for irregularity to the non-exempt amounts.

The DGT's ruling

The premium of a group insurance policy that instruments pension commitments may be exempt up to the lesser of the legal amount for unfair dismissal and 180,000 euros. The excess premium is taxed as income in kind, and the 30% reduction may be applied if the seniority and limit requirements are met. The monthly income received is taxed as employment income to the extent that it exceeds the exempt compensation and the premiums already imputed.

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