BASQUE COUNTRY: Is the severance pay exempt?

In general, severance pay is exempt, as long as there is a real and effective disconnection of the employee from the company.

What is the limit of the exemption?

The limit is as follows:

• 187,272 euros, in Araba and Bizkaia.
• 183,600 euros, in Gipuzkoa.

What is meant by effective disconnection?

Disconnection refers to the termination of the employment relationship between the employee and the company, either by dismissal or by non-renewal.

And what if the company rehires the employee?

There is a presumption (which allows for contrary evidence) that there is no disconnection if the employee resumes services to the same company or another linked to it within the 3 years following the dismissal.

Therefore, if the employee returns to the company within the specified period, the severance pay is not exempt, and must be included in the self-assessment of the tax period in which they reintegrate, the amount or quantity derived from the exemption plus late payment interest.

On the contrary, if they return to the company after the mentioned period, the exemption is not affected.

Our professionals will clarify any doubts you may have about the functioning of the exemption.