Doctrine by topic · DGT Observatory

Termination of 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

Refined position High confidence 34 rulings · 2015–2026

Current position

Severance payments resulting from the mutual agreement to terminate an employment relationship are income obtained in a notoriously irregular manner. To apply the 30% reduction under article 18.2 of the Personal Income Tax Law (LIRPF), it is an indispensable requirement that such income be attributed to a single tax period. Furthermore, the income must have a generation period exceeding two years.

The DGT's position has shifted from considering that mutual agreement did not allow for the exemption in certain leave plans (V1108-16) to confirming that it does indeed constitute notoriously irregular income (V0411-17). The evolution has focused on specifying the requirements for applying the reduction, such as attribution to a single tax period and a generation period exceeding two years.

Turning points

  1. V0411-17

    Establishes that amounts from mutual agreement termination are considered income obtained in a notoriously irregular manner, allowing the 30% reduction if attributed to a single tax period.

  2. V0997-21

    Specifies that for the reduction under article 18.2 of the LIRPF, the income must have a generation period exceeding two years, linking seniority and the agreement to said period.

Analysis based on 33 of 34 rulings with a stated position. Updated 24 September 2026.

Rulings on this topic

24
V5271-26 28 Jul 2026

30% reduction allowed on mutual agreement termination compensation

SG de Impuestos sobre la Renta de las Personas Físicas
rendimientos del trabajoextinción de relación laboralmutuo acuerdoreducción del 30%rendimientos notoriamente irregulares LIRPF — Ley 35/2006 del IRPF art. 17LIRPF — Ley 35/2006 del IRPF art. 18.2
Affects CompanyExpat · Non-residentIndividual
V1328-26 29 May 2026

30% reduction on dismissal indemnity applies regardless of prior five-year use

SG de Impuestos sobre la Renta de las Personas Físicas
indemnización por despidoperiodo de generaciónreducción del 30%rendimientos del trabajoextinción de relación laboral LIRPF — Ley 35/2006 del IRPF art. 18.2LIRPF — Ley 35/2006 del IRPF art. 7.e
Affects CompanyExpat · Non-residentIndividual
V1271-26 25 May 2026

Reduction of 30% for irregular earnings not applicable to fragmented payments

SG de Impuestos sobre la Renta de las Personas Físicas
rendimientos del trabajoreducción por irregularidadmutuo acuerdoperíodo de generaciónimputación de rendimientos LIRPF — Ley 35/2006 del IRPF art. 7.eLIRPF — Ley 35/2006 del IRPF art. 17.1
Affects CompanyExpat · Non-residentIndividual
V2455-22 30 Nov 2022

Severance payments following an employee's death are subject to Inheritance Tax

SG de Impuestos sobre la Renta de las Personas Físicas
rendimientos del trabajohecho imponibletítulos sucesoriosretencionesimpuesto sobre sucesiones LIRPF — Ley 35/2006 del IRPF art. 17.1LISD — Ley 29/1987 de Sucesiones y Donaciones art. 3.1.a
Affects CompanyExpat · Non-residentIndividual
V0704-20 3 Apr 2020

30% tax reduction not applicable to post-contractual non-compete compensation

SG de Impuestos sobre la Renta de las Personas Físicas
reducción del 30%pacto de no competencia poscontractualperíodo de generaciónrendimientos del trabajoextinción de relación laboral LIRPF — Ley 35/2006 del IRPF art. 18.2RIRPF — RD 439/2007, Reglamento del IRPF art. 12.1
Affects CompanyExpat · Non-residentIndividual

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