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V3044-18 28 November 2018 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · pacto de no competencia poscontractual

The 30% reduction is not applicable to compensation for a post-contractual non-compete agreement

An executive inquired whether the compensation received for a non-compete agreement following their dismissal could benefit from the 30% reduction under Article 18.2 of the LIRPF. The DGT has responded that it is not applicable because there is no generation period exceeding two years.

The question raised

It is asked whether the 30 percent reduction of Article 18.2 of Law 35/2006 is applicable to the compensation.

The DGT's ruling

Compensation for a non-compete agreement does not qualify as income obtained in a notoriously irregular manner according to Article 12.1 of the IRPF Regulations. As it is not notoriously irregular income, a generation period exceeding two years is required to apply the 30% reduction. Since said compensation arises with the dismissal itself, there is no prior generation period exceeding two years, therefore the reduction is not applicable.

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