Skip to content
Back to index
V4944-16 15 November 2016 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del trabajo

The 30% reduction for irregular income may apply to mutual agreement settlements

A taxpayer inquired whether payments received through a voluntary termination incentivised by mutual agreement qualify for the reduction for irregular income. The Directorate General for Taxes (DGT) ruled that, as it is a mutual agreement resolution, there is no dismissal exemption; however, the 30% reduction is applicable 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 the 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 they are imputed to a single tax period. The exemption under Article 7 e) of the LIRPF does not apply because the termination does not constitute a dismissal.

Book your free first meeting