Collective redundancy severance payments will have an exemption limit of 180,000 euros

The tax treatment of amounts received following a collective redundancy raises doubts regarding the actual scope of the exemptions applicable to Personal Income Tax (IRPF). The Dirección General de Tributos (DGT) has specified the limits that must be applied to determine which part of the severance remains tax-free and which concepts must be included as employment income.

What the DGT has resolved

The administration establishes that the part of the collective redundancy severance that is not taxed has a double limit. The exempt amount will be the lesser of the following two values:

• The amount established in the Workers' Statute for unfair dismissal.
• The figure of 180,000 euros.

Any excess over these limits must be taxed as employment income in the IRPF. However, said excess may benefit from the 30% reduction if the requirements for generating income and the amount limits provided in current regulations are met. Likewise, the treatment of other concepts has been clarified:

• Contributions to special agreements: If paid by the employer, they are not taxed for the worker. If paid by the worker themselves, they constitute full employment income.
• Health insurance: Health insurance premiums are exempt up to a maximum of 500 euros annually per person, which increases to 1,500 euros in the case of disability.

What it means for you

For the worker, this implies that receiving a high severance payment does not guarantee a total exemption. It is necessary to calculate precisely whether the amount exceeds the 180,000 euro threshold or the provisions of the Workers' Statute to avoid errors in the income tax return. For companies, this criterion requires the correct application of withholdings and exact knowledge of which concepts, such as contributions or health insurance, must be included in the employee's taxable base.

What should be done

In the event of a collective redundancy process, it is necessary to verify the composition of the severance and compare it with the legal limits to determine the real tax impact. It is recommended to analyze whether the excess severance meets the requirements to apply the 30% reduction and to ensure that the treatment of health insurance premiums and contributions to special agreements complies with the DGT ruling.