Doctrine by topic · DGT Observatory

Compensation by Mutual Agreement: 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 9 rulings · 2014–2025

Current position

Compensation for termination by mutual agreement is characterized as income from employment and is not exempt under Article 7 e) of the Personal Income Tax Law (LIRPF). It is considered income obtained in a notoriously irregular manner over time. However, the 30% reduction under Article 18.2 of the LIRPF is only applicable if the amounts are imputed to a single tax period.

The DGT's position has remained constant throughout the analyzed sequence. No changes are observed in the classification of the nature of the compensation nor in the requirements for applying the reduction for irregularity over time.

Analysis based on 8 of 9 rulings with a stated position. Updated 28 September 2026.

Rulings on this topic

9
V0690-25 15 Apr 2025

30% reduction applicable to pension and settlement awards in different years

SG de Impuestos sobre la Renta de las Personas Físicas
reducción del 30%periodo de generaciónrendimientos notoriamente irregularesindemnización por mutuo acuerdopremio de antigüedad LIRPF — Ley 35/2006 del IRPF art. 18.2Reglamento del Impuesto
Affects CompanyExpat · Non-residentIndividual
V1432-15 8 May 2015

Mutual agreement severance is subject to Income Tax but allows for a 40% reduction

SG de Impuestos sobre la Renta de las Personas Físicas
indemnización por mutuo acuerdorendimientos del trabajoreducción por irregularidadexención de indemnizacionesperiodo de generación LIRPF — Ley 35/2006 del IRPF art. 7.eLIRPF — Ley 35/2006 del IRPF art. 18.2.a
Affects CompanyExpat · Non-residentIndividual

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