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V4943-16 15 November 2016 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del trabajo

30% irregularity reduction applicable to mutual agreement settlements

A taxpayer queried whether payments received through a voluntary severance scheme (mutual agreement) qualify for the irregularity reduction. The DGT ruled that while mutual agreements do not qualify for dismissal exemptions, the 30% reduction applies if the amounts are attributed to a single tax period.

The question raised

Application of the 30 percent reduction provided for in Article 18.2 of the Personal Income Tax Law to the compensation for the termination of the employment relationship.

The DGT's ruling

Amounts resulting from the mutual agreement termination of an employment relationship are considered employment income obtained in a notoriously irregular manner over time. Therefore, the 30% reduction provided for in Article 18.2 of the Personal Income Tax Law (LIRPF) is applicable, provided that such income is imputed to a single tax period.

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