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10 April 2025

Compensation paid to the dismissed worker for damages is not taxable

Compensation payments to the dismissed worker are taxable if they correspond to the income not received by the latter as a result of termination of employment. They are not taxable if they can be considered as compensation for damages suffered by the employee.
The Regional Tax Commission of Lombardy, with judgment 886/21/2018, confirmed the aforementioned assumption, providing, however, for the purpose of granting reimbursement of illegitimately withheld IRPEF. This is proof, even on a presumptive basis, that the indemnity in question has a compensatory and not a remunerative function. (LC)