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V2986-17 20 November 2017 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del trabajo

Retirement bonuses granted by a company are subject to Income Tax withholding

A query was raised regarding whether a retirement bonus paid to an employee should be subject to Income Tax (IRPF) withholding. The Directorate General for Tax (DGT) ruled that it must be classified as employment income and, as it is not exempt, the corresponding withholding must be applied.

The question raised

Subject to IRPF withholding on a retirement bonus granted to a worker.

The DGT's ruling

The retirement bonus granted by a company to a worker constitutes employment income pursuant to Article 17 of Law 35/2006. As it does not constitute a case of legal exemption, it is subject to withholding in accordance with Article 75 of the IRPF Regulations. The applicable withholding rate shall be that determined by Article 80 of the aforementioned Regulations.

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