3.1.2. Income exempt from article 7 of the Law

According to article 7 of the Tax Law, the following incomes are exempt:

1. Aid and compensation
   • Extraordinary public benefits for acts of terrorism and pensions derived from medals and decorations awarded for acts of terrorism. In particular, compensation and financial aid received under Law 32/1999 of 8 October on Solidarity with Victims of Terrorism are exempt.
   • Aid of any kind received by those affected by the Human Immunodeficiency Virus, regulated by Royal Decree-Law 9/1993, of May 28.
   • Compensation as a result of civil liability for personal injury, in the amount legally or judicially recognized.

     Among others, the following are considered to be compensation in the legally recognised amount: compensation paid for accidents occurring up to 31 December 2015, in accordance with the provisions of article 1.2 of the Law on Civil Liability and Insurance in the Circulation of Motor Vehicles, approved by Royal Legislative Decree 8/2004, of 29 October 2004, as long as they are paid by an insurance company as a result of the civil liability of the insured; for accidents occurring after 1 January 2016, the valuation system set out in the new Title IV and the new Annex that has replaced the previous one of the Consolidated Text of the Law on Civil Liability and Insurance in the Circulation of Motor Vehicles will be applied, both introduced by the sole article of Law 35/2015 of 22 September on the reform of the system for the valuation of damages caused to persons in traffic accidents.

   • Compensation for personal injury arising from accident insurance contracts, except those whose premiums could have reduced the tax base or been considered a deductible expense from the income from professional activities by application of the provisions of article 30.2.1 of the Tax Law.

     The exemption extends to the amount resulting from applying, to the damage suffered, the system for assessing damages and injuries caused to persons in traffic accidents, incorporated as an annex in the Law on Civil Liability and Insurance in the Circulation of Motor Vehicles.

   • Compensation for dismissal or termination of the worker, in the amount established as mandatory in the Workers' Statute, in its implementing regulations or, where appropriate, in the regulations governing the execution of judgments, without being able to be considered as such the amount established by virtue of an agreement, pact or contract.

     When the employment contract is terminated prior to the conciliation act, severance pay that does not exceed the amount that would have been payable if the dismissal had been declared unfair will be exempt, and it is not a case of termination by mutual agreement within the framework of collective plans or systems of incentivized redundancy. In 2012, it is necessary to differentiate between layoffs that occurred up to July 7 of that year and those that occurred after that date:

     • In dismissals that take place between January 1, 2012 and July 7, 2012, severance pay will be exempt when the employer acknowledges this at the time of notification of the dismissal, and provided that the severance pay does not exceed the amount that would have corresponded in the event that the dismissal had been declared unfair.
     • In dismissals made after July 7, 2012, only compensations recognized in an act of conciliation or in a court ruling will be exempt.

     Without prejudice to the provisions of the preceding paragraphs, in cases of dismissal or termination as a result of employment regulation files, processed in accordance with the provisions of article 51 of the Workers' Statute and subject to approval by the competent authority, or caused by the reasons provided for in letter c) of article 52 of the aforementioned Statute, provided that, in both cases, they are due to economic, technical, organizational, production reasons or force majeure, the part of the compensation received that does not exceed the limits established on a mandatory basis in the aforementioned Statute for unfair dismissal shall be exempt, that is, 33 days per year of service up to a maximum of 24 monthly payments.

     The exemption for dismissal or termination of the worker will have a limit of 180,000 euros which is applicable:

     1. For layoffs that occur from August 1, 2014 .
     2. To dismissals resulting from ERE or collective dismissals when the ERE has been approved or the collective dismissal has been initiated before August 1, 2014.

     NOTE: This last section will apply to dismissals resulting from employment regulation files approved after the entry into force of Royal Decree-Law 2/2009, of March 6 , as well as to dismissals resulting from the causes provided for in letter c) of article 52 of the Workers' Statute from this same date. The aforementioned Royal Decree-Law came into force on March 8, 2009 . Compensation payments in process or in force as of February 12, 2012 will be exempt in the amount not exceeding 45 days of salary per year of service, with periods of time less than a year being prorated by months up to a maximum of 42 monthly payments.

   • Compensation paid by public administrations for personal injury resulting from the operation of public services, when established in accordance with the procedures provided for in Royal Decree 429/1993, of March 26, approving the Regulations of procedures of public administrations in matters of patrimonial liability.
   • The financial aid regulated in article 2 of Law 14/2002, which includes social aid for people with haemophilia or other congenital coagulopathies who have developed hepatitis C as a result of having received treatment with coagulation factor concentrates within the public health system. (Law 14/2002).
   • Income derived from the application of hedging instruments will be exempt when they exclusively cover the risk of increases in the variable interest rate of mortgage loans intended for the acquisition of the taxpayer's habitual residence, regulated in article nineteen of Law 36/2003. 
   • The compensation provided for in the legislation of the State and the Autonomous Communities to compensate for the deprivation of liberty in penitentiary establishments as a result of the cases contemplated in Law 46/1977, of October 15, on Amnesty.
   • Any aid received by persons who reported, in their Personal Income Tax returns for the years 1999 to 2005, the compensation provided for in the legislation of the State and the Autonomous Communities to compensate for deprivation of liberty in penitentiary establishments as a result of the cases contemplated in Law 46/1977, on Amnesty, will be exempt.

     These grants are quantified at 15% of the amounts that, for this purpose, would have been reported in the Personal Income Tax return for each of these tax periods.

     If the persons who received the compensation and stated it in the corresponding declaration have died, the right to aid and exemption will correspond to their heirs.

2. Social Security pensions and benefits and similar

   • Benefits granted to the taxpayer by Social Security or by entities that replace it as a result of permanent total disability or severe disability.

     Likewise, the benefits granted to professionals not integrated into the special Social Security regime for self-employed workers or freelancers by social security mutual funds that act as alternatives to the aforementioned special Social Security regime, provided that they are benefits in situations identical to those provided for absolute permanent disability or severe disability by Social Security.

     The exempt amount will be limited to the amount of the maximum benefit recognized by Social Security for the corresponding concept. The excess will be taxed as work income, understood to be produced, in the case of concurrence of benefits from Social Security and the aforementioned mutual societies, in the benefits of the latter.

   • Pensions for disability or permanent incapacity of the passive classes regime, provided that the injury or illness that caused them completely disables the recipient of the pension for any profession or trade.
   • Family benefits regulated in Chapter IX of Title II of the consolidated text of the General Social Security Law, approved by Royal Legislative Decree 1/1994, of June 20, and pensions and passive benefits for orphans and for grandchildren and siblings, under twenty-two years of age or incapacitated for any work received from the public Social Security regimes and passive classes. Public maternity and paternity benefits received by Social Security, by the autonomous communities or local entities will also be exempt. Non-contributory family benefits will also be exempt.
   • Amounts received by public employees for maternity, adoption, guardianship or paternity leave will also be exempt, up to the maximum benefit recognized by Social Security for the same concept; the remainder, if any, will be taxed as employment income.
   • Benefits granted to professionals not included in the special Social Security regime for self-employed workers or freelancers by social welfare mutual funds that act as alternatives to the special Social Security regime will also be exempt, provided that the benefits are received for situations identical to those mentioned above for professionals included in said special regime. The exempt amount will be limited to the amount of the maximum benefit recognized for this purpose by Social Security. In the event of concurrent benefits from Social Security and mutual funds, the excess will be deemed to have occurred in the mutual fund benefits.
   • Other public benefits for birth, delivery or multiple adoption, adoption, dependent children and orphanhood.
   • Public economic benefits linked to the service, for care in the family environment and personalized assistance that are derived from the Law on the promotion of personal autonomy and care for people in situations of dependency.

   • Unemployment benefits recognised by the respective managing entity when received in the form of a single payment established in Royal Decree 1044/1985, of 19 June, which regulates the payment of unemployment benefits in the form of a single payment, provided that the amounts received are used for the purposes and in the cases provided for in the aforementioned regulation.

     This exemption will be conditional on maintaining the action or participation for a period of five years, in the event that the taxpayer has joined a labour company or worker cooperative or has made a contribution to the share capital of a commercial entity, or on maintaining the activity for the same period, in the case of a self-employed worker.

   • Pensions granted to those persons who suffered injuries or mutilations during or as a consequence of the 1936/1939 civil war, either under the State's Passive Classes regime or under special legislation enacted for this purpose.

3. Other public benefits

   • Amounts received from public institutions for the care of minors, people with disabilities or people over sixty-five years of age, whether in the simple, permanent or pre-adoption modality or the equivalent in the legal systems of the Autonomous Communities, including the care in the execution of the judicial measure of cohabitation of the minor provided for in Organic Law 5/2000. Financial aid granted by public institutions to people with a disability of 65% or more or those over 65 years of age to finance their stay in residences or day centres will also be exempt, provided that the rest of their income does not exceed twice the IPREM (public indicator of income for multiple purposes) (for 2018 the annual amount of the IPREM has been set at 7,519.59 euros).
   • Public scholarships and scholarships awarded by non-profit entities to which the special regime regulated in Title II of Law 49/2002, of December 23, on the tax regime of non-profit entities and tax incentives for patronage, applies, received to pursue regulated studies, both in Spain and abroad, at all levels and grades of the educational system. Likewise, public scholarships and those awarded by the non-profit entities mentioned above for research in the field described by Royal Decree 63/2006, of January 27, approving the Statute of research personnel in training, as well as those awarded by them for research purposes to civil servants and other personnel in the service of public administrations and to teaching and research staff at universities.

     Likewise, scholarships granted by banking foundations regulated in Title II of Law 26/2013 on savings banks and banking foundations in the development of their social work activity will be exempt, also for pursuing Regulated Studies and Research.

   • Training and technical assistance with an economic content, with a limit of 60,100 euros, for high-level athletes adjusted to the preparation programs established by the Higher Sports Council with the Spanish Sports Federations or with the Spanish Olympic Committee, which meet the following requirements (art. 4 Rgl):
     1. That its beneficiaries have been recognized as high-level athletes, in accordance with the provisions of Royal Decree 1467/1997, of September 19, on high-level athletes.
     2. That they are financed, directly or indirectly, by the Higher Sports Council, by the Olympic Sports Association, by the Spanish Olympic Committee or by the Spanish Paralympic Committee.
   • The amounts paid by the Spanish State to members of international peace or humanitarian missions for the following reasons (art. 5 Rgl.):
     1. Extraordinary gratuities of any nature that respond to the performance of the international peace or humanitarian mission.
     2. Compensation or benefits paid for personal injuries suffered during the same.
   • Family benefits and assistance received from any of the Public Administrations, whether linked to birth, adoption, foster care or care of minor children.
   • The minimum insertion incomes established by the Autonomous Communities, as well as other aid established by these or by local entities to attend to groups at risk of social exclusion, situations of social emergency, housing needs of people without resources or food needs, schooling and other basic needs of minors or people with disabilities when they or people in their care lack sufficient financial means, these aids will be exempt up to a maximum annual joint amount of 1.5 times the IPREM (7,519.59 euros for the year 2017).
   • Aid granted to victims of violent crimes referred to in Law 35/1995, as well as aid provided for in Organic Law 1/2004 on Comprehensive Protection Measures against Gender Violence, and other public aid paid to victims of gender violence due to this condition, are also declared exempt.
   • Likewise, aid granted under the provisions of Royal Decree 920/2014, of October 31, which regulates the direct granting of subsidies intended to offset the costs derived from the reception or access to television audiovisual communication services in buildings affected by the release of the digital dividend, will be exempt.

4. Prizes

   • Relevant literary, artistic or scientific awards, under the conditions established by regulation, as well as the "Prince of Asturias" awards, in their different modalities, awarded by the Prince of Asturias Foundation.
   • Prizes from lotteries and bets organised by the State Lottery and Betting Society and by the Autonomous Communities, the total amount of which is equal to or less than 2,500 euros, or up to said amount in the case of prizes exceeding 2,500 euros.
   • Raffles organised by the Spanish Red Cross and the National Organisation for the Blind whose total amount is equal to or less than 2,500 euros, or up to said amount in the case of prizes exceeding 2,500 euros.

5. Other income

   • Child support payments received from parents pursuant to a court decision.
   • Income from work actually performed abroad, with a maximum limit of 60,100 euros per year, and provided that the legally established requirements are met.
   • Benefits received for burial or funeral, up to a limit of the total amount of expenses incurred.
   • Positive returns on movable capital from new Long-Term Savings Plans are declared exempt, provided that the taxpayer does not make any withdrawal of capital resulting from the Plan before the end of the 5-year period from its opening.
   • The income from work derived from benefits obtained in the form of income by people with disabilities corresponding to contributions to social security systems in Article 53 of the Law, as well as the income from work derived from contributions to protected assets of people with disabilities (DA 18 of the Law), up to a maximum annual amount for each of these incomes of three times the public indicator of multiple-purpose income.

1. 3.1.2.1. Exempt compensation for dismissal or termination of the worker
2. 3.1.2.2. Exemption from certain literary, artistic and scientific prizes
3. 3.1.2.3. Exemption for income received from work performed abroad