I was laid off in 2022, what taxes do I have to pay to the Treasury?
When a worker is dismissed is entitled to compensation whose amount will vary according to the time worked in the company. This is income for which the worker will have to pay taxes. Specifically, the Tax Agency includes the compensation as work income that must be taxed by Personal Income Tax (IRPF).
In this way, when performing the statement of income of the year in which the severance pay is received, this amount must be included, along with others such as salary or unemployment benefit. That is to say, will be added to the general tax base. The total will be taxed between 19% and 47%, depending on the sections.
However, the Treasury recognizes the exemption from paying taxes for this compensation provided that a series of requirements are met. In case of compliance, the taxpayer should not pay taxes for that amount and will not compute to calculate the general tax base.
Requirements for the exemption
The Tax Agency establishes the exemption “up to the amount established as mandatory in the Workers’ Statutein its implementing regulations, where appropriate, in the regulations governing the execution of sentences”. In addition, it indicates that only “compensations recognized in an act of conciliation or in a judicial resolution” will be exempt.
In any case, there is a limit established: 180,000 euros. Therefore, if the compensation received by the worker exceeds that amount, the excess will be subject to taxation.
In addition, the worker also has the right to compensation even if the end of the contract is at your will. Specifically, you will also receive this amount when there is a transfer of work center that implies a change of residence, suffers a detrimental modification of the working day, schedule or shift work regime or when the company carries out a change that “results in the detriment of professional training or impairment of the worker’s dignity”. Compensation received in such cases are also exempt.
All of the above applies to any severance pay, with one exception: temporary hiring. For dismissal in this type of contract, the exemption in taxation by personal income tax is not recognized.
For its part, the Tax Agency also does not consider covered by the exemption “the compensation established by virtue of the agreement, agreement or contract” or the amounts received by the worker “for any reason other than the dismissal or termination of the worker or for which he is not established on a mandatory basis in the Workers’ Statute”. In these cases, the Treasury remembers that the concepts are “fully subject to tax and must be fully declared”.
How much do they have to pay me if they fire me in the Rent?
The amount of compensation depends on how the dismissal is. If it is objective, that is, it meets the legal requirements, the amount that the worker will receive will be 20 days per year workedwith a maximum of 12 monthly installments.
For its part, when the dismissal is unfair – determined by a judge – the compensation rises to 33 days per year worked, with a maximum of 24 months. In this case, if the worker had been working since before 2012, for that period they will have 45 days per year worked and the maximum will be 42 monthly payments.
This compensation is different from the settlement. All workers are entitled to this concept because it is the final settlement of all outstanding amounts that the company owes the worker. It includes salary concepts, for example, part of extraordinary payments, or unused vacations, among others. This amount will be taxed by personal income tax as income from work in the general tax base.