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.

← DGT Observatory

How the DGT's position has evolved

Settled doctrine High confidence 8 rulings · 2014–2025

Current position

The exemption under Article 7 e) of the LIRPF (Personal Income Tax Law) requires that the unfair dismissal be recognized through a judicial ruling or a judicially approved settlement agreement. The exempt amount is the lesser of the limits set by the Workers' Statute or 180,000 euros. The excess is taxed as employment income and does not allow for the 30% reduction if the generation period is less than two years.

The DGT's position remains constant in requiring a formal recognition of the unfair dismissal (SMAC or judicial) for the exemption. The evolution shows greater technical precision by integrating the quantitative exemption limits and the conditions for the reduction due to irregularity.

Turning points

  1. V2109-20

    Specifies that the exemption only applies to the mandatory amount under the Workers' Statute, with the excess taxed as employment income.

  2. V1279-25

    Establishes the 180,000 euro limit for the exemption and conditions the 30% reduction on a two-year generation period.

Analysis based on 8 of 8 rulings with a stated position. Updated 13 October 2026.

Rulings on this topic

8
V1279-25 10 Jul 2025

Judicial indemnity for wrongful dismissal exempt up to legal limits

SG de Impuestos sobre la Renta de las Personas Físicas
indemnización por despidoexenciónimprocedenciaimputación temporalrendimiento del trabajo LIRPF — Ley 35/2006 del IRPF art. 7.dLIRPF — Ley 35/2006 del IRPF art. 7.e
Affects CompanyExpat · Non-residentIndividual
V0120-19 18 Jan 2019

Non-tax-exempt redundancy payments are subject to withholding tax

SG de Impuestos sobre la Renta de las Personas Físicas
indemnización por despidoexenciónimprocedenciarendimiento del trabajoretención a cuenta LIRPF — Ley 35/2006 del IRPF art. 7.e)LIRPF — Ley 35/2006 del IRPF art. 18.2
Affects CompanyExpat · Non-residentIndividual

Apply this to your case

Beckham Law & impatriate taxationTalk to the team applying this doctrine daily.
IRPF Spain 2026 CalculatorEstimate the impact on your case in two minutes.
Talk to the tax teamWe check whether this criterion affects you and what it means in your situation.

Apply this to a real case

What is published here, applied to a company or a specific case. The first meeting is free.

Book a meeting Write to the firm
Email
Contact