Doctrine by topic · DGT Observatory

Termination of the Employment Relationship: 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 30 rulings · 2015–2025

Current position

Severance payments resulting from mutual agreement are considered employment income and do not benefit from the exemption under Article 7 e) of the LIRPF (Personal Income Tax Law). Although they are considered income obtained in a notoriously irregular manner, the 30% reduction under Article 18.2 of the LIRPF only applies if they are attributed to a single tax period. If the payment is fragmented over several tax years, the right to said reduction is lost.

The DGT's position remains constant in classifying these amounts as employment income without exemption. The evolution focuses on the restrictive application of the reduction for irregular income, requiring attribution to a single tax year for its application. Rulings such as V2495-23 and V1837-25 reinforce that the fragmentation of payment prevents the tax benefit.

Turning points

  1. V1860-18

    Establishes that termination by mutual agreement does not allow for the exemption under Article 7 e) of the LIRPF, but does allow for the 30% reduction if attributed to a single period.

  2. V2495-23

    Clarifies that compensation for contract suspension does not qualify as income obtained in a notoriously irregular manner as it does not derive from a termination.

Analysis based on 29 of 30 rulings with a stated position. Updated 24 September 2026.

Rulings on this topic

24
V1833-25 13 Oct 2025

No reduction of 30% on lump-sum settlement if paid in installments

SG de Impuestos sobre la Renta de las Personas Físicas
rendimientos del trabajoextinción de la relación laboralmutuo acuerdoreducción por irregularidadperiodo de generación LIRPF — Ley 35/2006 del IRPF art. 7.eLIRPF — Ley 35/2006 del IRPF art. 17
Affects CompanyExpat · Non-residentIndividual
V1001-21 20 Apr 2021

30% tax reduction unavailable if severance pay is spread over several years

SG de Impuestos sobre la Renta de las Personas Físicas
reducción del 30%rendimientos del trabajoextinción de la relación laboralmutuo acuerdoperiodo impositivo LIRPF — Ley 35/2006 del IRPF art. 18.2RIRPF — RD 439/2007, Reglamento del IRPF art. 12
Affects CompanyExpat · Non-residentIndividual
V0077-20 15 Jan 2020

Severance pay may qualify for the 30% tax reduction if legal requirements are met

SG de Impuestos sobre la Renta de las Personas Físicas
reducción del 30 por cientoindemnización por desvinculaciónpremio de permanenciaperíodo de generaciónextinción de la relación laboral LIRPF — Ley 35/2006 del IRPF art. 18.2LIRPF — Ley 35/2006 del IRPF art. 17.2. a)
Affects CompanyExpat · Non-residentIndividual
V0072-20 15 Jan 2020

Production bonus not exempt from IRPF as not a dismissal indemnity

SG de Impuestos sobre la Renta de las Personas Físicas
indemnización por despidobono por producciónexenciónextinción de la relación laboralobjetivos de producción LIRPF — Ley 35/2006 del IRPF art. 7.eEstatuto de los Trabajadores
Affects CompanyExpat · Non-residentIndividual
V2543-19 19 Sept 2019

Voluntary severance pay is taxed in the tax year the employment relationship ends

SG de Impuestos sobre la Renta de las Personas Físicas
rendimientos del trabajoimputación temporalextinción de la relación laboraldesvinculación voluntariaexigibilidad de la renta LIRPF — Ley 35/2006 del IRPF art. 14.1.aLIRPF — Ley 35/2006 del IRPF art. 17.1
Affects CompanyExpat · Non-residentIndividual

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