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V2778-18 24 October 2018 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · indemnización por despido improcedente

Excess unfair dismissal compensation is taxed in the period it becomes due

A worker received unfair dismissal compensation agreed upon in a conciliation agreement, which was paid in instalments during 2018. The query concerns when the deferred amount should be taxed and whether the 30% reduction can be applied.

The question raised

Inquiry is made regarding the temporal attribution of the deferred amount of the compensation, i.e., the payments made in 2018.

The DGT's ruling

The portion of the compensation that exceeds the legal limits established in the Workers' Statute is taxed as income from employment. Said excess shall be attributed to the tax period in which it becomes due to its recipient. If the quotient between the generation period and the number of installment periods is greater than two, the 30% reduction provided for in Article 18.2 of the Personal Income Tax Law may be applied.

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