Doctrine by topic · DGT Observatory

Unfair Dismissal: 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 48 rulings · 2015–2026

Current position

Severance pay for dismissal is exempt from Personal Income Tax (IRPF) up to the amount resulting from the lesser of two limits: the amount mandatorily established in the Workers' Statute for unfair dismissal and the cap of 180,000 euros. The excess over these limits is taxed as employment income. The exemption does not apply to the portion of the severance pay corresponding to services rendered under a commercial relationship.

The DGT's position remains constant in the application of the exemption limits based on the Workers' Statute and the 180,000 euro cap. Throughout the rulings, consistency has been maintained in the treatment of excesses as employment income. The latest ruling adds a clarification regarding the exclusion of services rendered under a commercial relationship.

Turning points

  1. V0090-26

    Introduces the exclusion of the exemption for the portion of the severance pay corresponding to services rendered under a commercial relationship.

Analysis based on 46 of 48 rulings with a stated position. Updated 19 September 2026.

Rulings on this topic

24
V1835-25 13 Oct 2025

Exemption applies to severance pay up to wrongful dismissal limit

SG de Impuestos sobre la Renta de las Personas Físicas
indemnización por despidodespido objetivodespido improcedenteexenciónrendimiento del trabajo LIRPF — Ley 35/2006 del IRPF art. 7.eLIRPF — Ley 35/2006 del IRPF art. 18.2
Affects CompanyExpat · Non-residentIndividual
V0010-25 2 Jan 2025

Dismissal compensation exempt up to unjust dismissal amount and 180,000 euros

SG de Impuestos sobre la Renta de las Personas Físicas
indemnización por despidodespido por causas objetivasdespido improcedenteexenciónrendimiento del trabajo LIRPF — Ley 35/2006 del IRPF art. 7.eLIRPF — Ley 35/2006 del IRPF art. 18.2
Affects CompanyExpat · Non-residentIndividual
V1152-23 5 May 2023

Statutory severance exemption capped at 180,000 euros

SG de Impuestos sobre la Renta de las Personas Físicas
indemnización por despidodespido colectivoexenciónrendimiento del trabajoreducción por irregularidad LIRPF — Ley 35/2006 del IRPF art. 7.eLIRPF — Ley 35/2006 del IRPF art. 18.2
Affects CompanyExpat · Non-residentIndividual
V3034-21 7 Dec 2021

Excess of unfair dismissal payment above statutory limits taxed as income

SG de Impuestos sobre la Renta de las Personas Físicas
indemnización por despidoexenciónrendimiento del trabajodespido improcedenteperiodo de generación LIRPF — Ley 35/2006 del IRPF art. 7.eLIRPF — Ley 35/2006 del IRPF art. 18.2
Affects CompanyExpat · Non-residentIndividual
V1545-21 24 May 2021

Dismissal compensation exempt up to Workers' Statute or €180,000 limit

SG de Impuestos sobre la Renta de las Personas Físicas
indemnización por despidoexencióndespido improcedenterendimientos del trabajoreducción del 30% LIRPF — Ley 35/2006 del IRPF art. 7.eLIRPF — Ley 35/2006 del IRPF art. 18.2
Affects CompanyExpat · Non-residentIndividual
V1254-21 6 May 2021

Payment for collective dismissal exempt up to 180,000 euros

SG de Impuestos sobre la Renta de las Personas Físicas
indemnización por despidodespido colectivoexenciónrendimiento del trabajodespido improcedente LIRPF — Ley 35/2006 del IRPF art. 7.eLIRPF — Ley 35/2006 del IRPF art. 18.2
Affects CompanyExpat · Non-residentIndividual

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