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V5086-16 24 November 2016 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del trabajo

Deductions for lack of notice in final settlements are not considered employment income

A query was raised regarding whether a deduction made by a company in a worker's final settlement, due to failure to provide notice of resignation, should be subject to Personal Income Tax (IRPF). The Directorate General for Taxes (DGT) ruled that these amounts do not constitute income for the worker.

The question raised

Impact of said deduction made by the company on the Personal Income Tax return.

The DGT's ruling

Amounts not paid to the employee due to lack of notice do not constitute an acquisition of income for Personal Income Tax purposes. The amount accrued as employment income is equivalent exclusively to the amount of the settlement actually paid, as the deducted amount was not exigible from the employee at the time of the settlement.

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