Doctrine by topic · DGT Observatory

Exemption for 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 26 rulings · 2015–2025

Current position

Compensation for termination by mutual agreement is considered income from employment and is not exempt under Article 7 e) of the LIRPF (Personal Income Tax Law). The 30% reduction for notoriously irregular income is only applicable if the amounts are imputed to a single tax period. If the payment is received in installments over several years, said reduction does not apply.

The DGT's position remains constant in excluding the dismissal exemption for terminations by mutual agreement. The doctrine has focused on specifying that the reduction for irregularity requires imputation to a single tax period. No changes in the criterion are observed, but rather a reiteration of the conditions for applying the 30% reduction.

Analysis based on 25 of 26 rulings with a stated position. Updated 24 September 2026.

Rulings on this topic

24
V0587-25 1 Apr 2025

Mutual agreement indemnity not exempt and must be charged to a single tax period

SG de Impuestos sobre la Renta de las Personas Físicas
rendimientos del trabajoresolución de mutuo acuerdoreducción por irregularidadexención por despidoimputación en un único periodo LIRPF — Ley 35/2006 del IRPF art. 7.e)LIRPF — Ley 35/2006 del IRPF art. 17.1
Affects CompanyExpat · Non-residentIndividual
V0301-25 17 Mar 2025

Professional indemnity payment taxed as business income

SG de Impuestos sobre la Renta de las Personas Físicas
rendimientos de actividades económicasindemnizaciónrelación laboralcontrato de prestación de serviciosreducción por irregularidad LIRPF — Ley 35/2006 del IRPF art. 7.eLIRPF — Ley 35/2006 del IRPF art. 18.2
Affects CompanyExpat · Non-residentIndividual
V2548-19 19 Sept 2019

Severance pay for senior management termination is not exempt from Income Tax

SG de Impuestos sobre la Renta de las Personas Físicas
relación laboral especial de alta direcciónrendimientos del trabajoexención por despidoreducción por irregularidadperiodo de generación LIRPF — Ley 35/2006 del IRPF art. 7.eLIRPF — Ley 35/2006 del IRPF art. 17.1
Affects CompanyExpat · Non-residentIndividual
V4944-16 15 Nov 2016

The 30% reduction for irregular income may apply to mutual agreement settlements

SG de Impuestos sobre la Renta de las Personas Físicas
rendimientos del trabajoresolución de mutuo acuerdoreducción por irregularidadperiodo de generaciónexención por despido LIRPF — Ley 35/2006 del IRPF art. 7e)LIRPF — Ley 35/2006 del IRPF art. 17.2.a)
Affects CompanyExpat · Non-residentIndividual
V4943-16 15 Nov 2016

30% irregularity reduction applicable to mutual agreement settlements

SG de Impuestos sobre la Renta de las Personas Físicas
rendimientos del trabajoresolución de mutuo acuerdoreducción por irregularidadperiodo de generaciónexención por despido LIRPF — Ley 35/2006 del IRPF art. 7eLIRPF — Ley 35/2006 del IRPF art. 17.2.a
Affects CompanyExpat · Non-residentIndividual

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