Back to index
V4949-16 15 November 2016 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del trabajo

Payments by mutual agreement are taxed as employment income and may qualify for irregularity reductions

The tax treatment of payments from a voluntary severance plan via mutual agreement was consulted. The DGT has determined that there is no redundancy exemption; however, the supplementary payment may qualify for an irregularity reduction. Conversely, the assistance for the special agreement with the Social Security is treated as employment income without reduction, although it is a deductible expense.

The question raised

Issue raised: Tax treatment of the amounts received by the worker under the Employment Plan.

The DGT's ruling

Amounts resulting from mutual agreement do not benefit from the exemption provided in Article 7 e) of the Personal Income Tax Law (LIRPF) and are taxed as employment income. The salary and retirement supplement may qualify for the 30% reduction for notoriously irregular income if imputed to a single period. The amount to finance the agreement with the Social Security is employment income without reduction, but it constitutes a deductible expense for the worker.

Book your free first meeting