Hacienda requires taxation on voluntary early retirements not linked to collective dismissals
The TEAC clarifies that compensation for incentivised departures or voluntary exits is only exempt from IRPF tax if part of a collective redundancy process.
The Tribunal Económico-Administrativo Central (TEAC) has clarified that compensation received for voluntary early retirements or incentivised departures will be subject to income tax (IRPF) unless they are part of a collective redundancy process, known in Spain as an Expediente de Regulación de Empleo (ERE).
This ruling aims to provide clarity on the tax obligations surrounding voluntary retirements, which have become increasingly common in various sectors as companies restructure their workforce.
According to the TEAC, only those indemnities that are included in a formal ERE will be exempt from taxation, thereby impacting many workers who may have opted for early retirement outside of such frameworks.
