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V2854-14 22 October 2014 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · responsabilidad civil

Compensation for not being called to a job is taxed as employment income

A query is made as to whether a compensation of €7,000 agreed upon in a conciliation agreement for not being called to a job is exempt from Personal Income Tax (IRPF). The DGT responds that it is not exempt because it does not compensate for personal damages, but rather for economic losses.

The question raised

Subjecting the aforementioned compensation to withholding.

The DGT's ruling

For compensation to be exempt due to civil liability, it must be for personal damages (physical, psychological, or moral) and the amount must be judicially recognized. The compensation in question compensates for the lack of receipt of employment income, therefore it is classified as employment income and is subject to withholding. The amount is considered judicially recognized when there is a voluntary approximation by the parties with judicial intervention.

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