30% Personal Income Tax (IRPF) Reduction: Seniority Bonus and Mutual Agreement Severance

The Dirección General de Tributos (DGT) has issued a relevant ruling regarding the application of the 30% reduction provided for in Personal Income Tax (IRPF). The core of the issue lies in determining whether it is possible to apply this tax benefit when a worker receives, in different tax years, a seniority bonus and severance pay for the termination of the employment relationship by mutual agreement.

What the DGT has ruled

The inquiry focuses on the interpretation of Article 18.2 of Law 35/2006. The taxpayer raised the question of whether the 30% reduction for irregular income, applicable to extraordinary earnings, could extend to both concepts if they were accrued or received at different times. The regulations establish that this reduction is applicable to severance pay for the definitive loss of employment income and to seniority bonuses, provided that the irregularity requirements demanded by law are met.

What it means for you

If you are a worker who has received a seniority bonus and, subsequently, severance pay for the termination of the employment relationship (for example, through mutual agreement), you should verify the application of this tax benefit. The key lies in the fact that both concepts are included in the reduction scenario of Article 18.2 of the IRPF Law. The fact that payments are made in different tax years does not prevent each of them from benefiting from the reduction, provided that each receipt individually meets the irregularity requirements and the limits established in the current regulations.

What you should do

It is fundamental to analyze the nature of each payment received and the timing of its accrual. Since the application of the 30% reduction depends on the correct classification of the irregularity of the income, it is recommended to assess each particular situation. It is necessary to check that both the seniority bonus and the severance pay meet the legal requirements to avoid errors in the income tax return. It is advised to review the documentation certifying the termination of the employment relationship and the amount of the concepts received to ensure the appropriate tax treatment.