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V3062-18 28 November 2018 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · indemnización por despido

Severance pay for termination by employer in domestic services is exempt from Personal Income Tax (IRPF)

A query was raised regarding whether severance pay received by a domestic worker following termination by their employer is exempt from Personal Income Tax (IRPF). The Directorate General for Taxes (DGT) ruled that such compensation is covered by the exemption set out in Article 7.e) of the IRPF Law.

The question raised

Inquiry is made regarding the application of the exemption provided for in Article 7.e) of the Personal Income Tax Law.

The DGT's ruling

The compensation for termination of the employment relationship for domestic household services due to employer withdrawal is exempt pursuant to Article 7.e) of the Personal Income Tax Law (LIRPF). For contracts entered into as of January 1, 2012, the exempt amount is 12 calendar days per year of service, subject to a limit of 6 monthly payments. For contracts entered into prior to that date, the exemption is 7 days per year, subject to a limit of 6 monthly payments.

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