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V5329-16 16 December 2016 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · indemnización por despido

Exemption limit of 180,000 euros applies to dismissal payments after 1 August 2014

A taxpayer asks whether the 180,000 euro exemption limit applies to a wrongful dismissal payment made in 2015 following a dismissal in October 2014. The DGT confirms that since the dismissal occurred after 1 August 2014, the limit does apply.

The question raised

Tax treatment in Personal Income Tax regarding the aforementioned severance pay. Exemption in Personal Income Tax. Application of the limit established in Article 7 e) in accordance with the provisions of the twenty-second transitional provision of the Tax Law.

The DGT's ruling

The 180,000 euro exemption limit for severance pay or termination payments applies to dismissals occurring from August 1, 2014. As the dismissal occurred on October 31, 2014, said limit established in Article 7 e) of the Personal Income Tax Law is applicable.

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