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V3103-17 29 November 2017 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · indemnización por despido

Exemption on redundancy pay may be lost if re-employed by the same company within three years

A worker inquired whether her redundancy pay remained tax-exempt after being rehired by the same company less than three years later. The DGT indicates that re-employment triggers a presumption that no genuine severance occurred, which could make the redundancy payment subject to taxation.

The question raised

Question posed: Tax treatment under Personal Income Tax (IRPF) regarding severance pay when being rehired by the company that had dismissed the worker. Existence of real and effective severance of the worker from the company. Admissibility of claiming late payment interest when filing the supplementary tax return.

The DGT's ruling

The exemption of severance pay requires a real and effective severance of the worker's relationship with the company. It is presumed that no such severance exists if the worker resumes providing services to the same company or an affiliated company within three years following the dismissal. This presumption allows for rebuttal by evidence to prove that the severance was indeed real and that the new relationship does not nullify it. If the exemption is lost, a supplementary tax return must be filed, including late payment interest.

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