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Practical Income Manual 2020.

5. Compensation for dismissal or dismissal of the worker

Regulations: Articles 7.e) Law Personal Income Tax ; 1 and 73 of the Personal Income Tax Regulations

Note: In all cases, the enjoyment of this exemption is conditional on the real and effective separation of the worker from the company. It will be presumed, unless proven otherwise, that said separation does not occur when in the three years following the dismissal or termination the worker returns to provide services to the same company or to another company linked to it, in the terms provided for in article 18 of the Corporate Tax Law, provided that in the case in which the relationship is defined based on the relationship of the partners or participants with the entity, the participation is equal to or greater than 25 percent.

  1. A) Exempt amount: Limits
  2. B) Cases that are not considered covered by the exemption
  3. C) Exempt compensation derived from dismissals classified as unfair
  4. D) Exempt compensation derived from termination of the contract at the will of the worker (cessation)
  5. E) Exempt compensation derived from collective dismissals due to economic, technical, organizational, production or force majeure causes
  6. F) Exempt compensation derived from the termination of the employment relationship due to death, retirement or disability of the employer
  7. G) Exempt compensation derived from the termination of the employment contract for objective causes.
  8. H) Exempt compensation derived from the termination of special labor relationships
  9. Summary table