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V3066-20 13 October 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · indemnización por despido

Redundancy compensation is exempt from Income Tax up to unfair dismissal limits and €180,000

The inquirer asks whether compensation received for redundancy on objective grounds is exempt from taxation without the need for mediation or court proceedings. The Directorate General for Taxes (DGT) responds that the exemption applies up to the amount established for unfair dismissal and is capped at €180,000.

The question raised

Whether the compensation paid to the worker is considered exempt from taxation without the need for a conciliation act before the Mediation, Arbitration and Conciliation Service or before the Court.

The DGT's ruling

Compensation for objective dismissal is exempt in the amount mandatorily established in the Workers' Statute. The exempt amount is limited to the lesser of: the amount for unfair dismissal (33 days per year with a maximum of 24 monthly payments for contracts after February 2012, or as provided in the eleventh transitional provision for previous ones) and the amount of 180,000 euros. The excess is considered earned income.

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