Doctrine by topic · DGT Observatory

Non-compete 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 · 2014–2026

Current position

Amounts received for a post-contractual non-compete agreement are classified as full employment income. The reduction provided in Article 18.2 of the LIRPF (Personal Income Tax Law) for notoriously irregular income is not applicable. This is because there is no generation period exceeding two years, as the compensation arises upon the termination of the contract or the dismissal itself.

The DGT's position has remained constant throughout the analyzed sequence. Since 2014, the administration has maintained that compensation for a non-compete agreement is employment income without entitlement to the reduction for irregularity. The most recent rulings reaffirm that the compensation does not have a generation period exceeding two years.

Analysis based on 8 of 9 rulings with a stated position. Updated 30 September 2026.

Rulings on this topic

9
V1351-26 3 Jun 2026

30% reduction does not apply to non-competition compensation

SG de Impuestos sobre la Renta de las Personas Físicas
indemnización por despidopacto de no competenciaperiodo de generaciónreducción por irregularidadrendimientos del trabajo LIRPF — Ley 35/2006 del IRPF art. 7.eLIRPF — Ley 35/2006 del IRPF art. 18.2
Affects CompanyExpat · Non-residentIndividual
V1451-25 29 Jul 2025

No applicable reduction of 30% for retention bonus or non-competition pact

SG de Impuestos sobre la Renta de las Personas Físicas
rendimientos del trabajoperíodo de generaciónbonus de retenciónpacto de no competenciareducción del 30 por ciento LIRPF — Ley 35/2006 del IRPF art. 18.2RIRPF — RD 439/2007, Reglamento del IRPF art. 12
Affects CompanyExpat · Non-residentIndividual
V2325-19 10 Sept 2019

Compensation for non-compete clauses is taxed as employment income

SG de Impuestos sobre la Renta de las Personas Físicas
rendimientos del trabajopacto de no competenciaretenciónretribuciones en especierendimientos íntegros LIRPF — Ley 35/2006 del IRPF art. 17.1LIRPF — Ley 35/2006 del IRPF art. 18.2
Affects CompanyExpat · Non-residentIndividual
V0520-14 25 Feb 2014

40% reduction not applicable to post-contractual non-compete compensation

SG de Impuestos sobre la Renta de las Personas Físicas
rendimientos del trabajopacto de no competenciareducción del 40%rendimientos notoriamente irregularesperiodo de generación LIRPF — Ley 35/2006 del IRPF art. 17.1LIRPF — Ley 35/2006 del IRPF art. 18.2.a
Affects CompanyExpat · Non-residentIndividual

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