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V2695-16 15 June 2016 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del trabajo

Severance payments by mutual agreement are taxed as employment income without exemption

A company has requested a ruling regarding the taxation of amounts paid under a voluntary redundancy scheme based on mutual agreement. The DGT has determined that the exemption under Article 7(e) of the LIRPF does not apply, although it examines the potential application of the reduction for irregularity in time.

The question raised

Taxation under Personal Income Tax of the amounts received by employees.

The DGT's ruling

Amounts resulting from mutual agreement resolutions do not benefit from the exemption provided in Article 7 e) of the LIRPF and must be taxed as employment income. The 30% reduction under Article 18.2 of the LIRPF is only applicable if the income is imputed to a single tax period. Therefore, the reduction does not apply if the payment is made in installments across different fiscal years.

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