(Appeal number 184/2007): The tax authorities and the NC found in this specific case that mutual agreements were entered into between the employer and a significant group of employees to terminate their employment relationship, instead of dismissals. Pursuant to the Personal Income Tax rules, broadly speaking, dismissals are tax exempt in Spain as opposed to mutual agreements which are not exempt.

The NC emphasised two key points to determine that no dismissals had arisen, but rather terminations were by mutual consent in the form of dismissals: (i) all the employees were above the age of 50; and (ii) severance payments made were not in accordance with the legally stipulated payment, but rather were calculated based on the difference between the dismissal date and the date on which the employee would have reached the legal age of retirement. For these reasons, the NC held that these compensations must be subjected to taxation.