Doctrine by topic · DGT Observatory

Temporary Contract: DGT doctrinal evolution

How the DGT's position on this topic has evolved, and the rulings it rests on.

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How the DGT's position has evolved

Settled doctrine High confidence 11 rulings · 2014–2024

Current position

In contracts with a duration of less than one year, the minimum withholding rate is 2%. If the worker continues to provide services or does so again within the same calendar year, the company must regularize the withholding rate based on the remuneration received and foreseeable. The worker may request in writing rates higher than those resulting from the general procedure, up to a maximum limit of 47%. It is not possible to request a rate lower than that established by the rules of Article 87 of the IRPF (Personal Income Tax) Regulation.

The DGT's position remains constant regarding the obligation to regularize withholdings when the employment relationship is extended within the same calendar year. An evolution is observed in the precision of the applicable limits, moving from a 45% cap in the regularization through contract conversion to a 47% limit for worker requests. The doctrine confirms that termination due to expiration of term does not allow for exemption from severance pay.

Turning points

  1. V1810-17

    Establishes the regularization procedure for the conversion of a temporary contract into a permanent one, setting a limit of 45% for the new withholding rate.

  2. V1123-24

    Specifies that the worker may request in writing withholding rates higher than those from the general procedure, raising the maximum limit to 47%.

Analysis based on 11 of 11 rulings with a stated position. Updated 27 September 2026.

Rulings on this topic

11
V1123-24 23 May 2024

Minimum withholding rate for contracts of less than one year set at 2%

SG de Impuestos sobre la Renta de las Personas Físicas
tipo de retenciónrendimientos del trabajocontrato temporalprocedimiento generaltipo mínimo RIRPF — RD 439/2007, Reglamento del IRPF art. 81.1RIRPF — RD 439/2007, Reglamento del IRPF art. 86.1
Affects CompanyExpat · Non-residentIndividual
V1167-16 22 Mar 2016

Severance pay for fixed-term contracts is not exempt from Income Tax

SG de Impuestos sobre la Renta de las Personas Físicas
indemnizacióncontrato temporalrenta exentarendimientos del trabajoreducción del 40 por ciento LIRPF — Ley 35/2006 del IRPF art. 7.eLIRPF — Ley 35/2006 del IRPF art. 17
Affects CompanyExpat · Non-residentIndividual
V1165-16 22 Mar 2016

Severance pay for fixed-term contracts is not exempt from Income Tax

SG de Impuestos sobre la Renta de las Personas Físicas
indemnizacióncontrato temporalexenciónrendimientos del trabajoreducción del 40 por ciento LIRPF — Ley 35/2006 del IRPF art. 7.eLIRPF — Ley 35/2006 del IRPF art. 17
Affects CompanyExpat · Non-residentIndividual
V0764-14 19 Mar 2014

Severance pay for fixed-term contracts is not exempt from Income Tax

SG de Impuestos sobre la Renta de las Personas Físicas
indemnizacióncontrato temporalexenciónrendimientos del trabajoreducción del 40 por ciento LIRPF — Ley 35/2006 del IRPF art. 7.eLIRPF — Ley 35/2006 del IRPF art. 17
Affects CompanyExpat · Non-residentIndividual

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