The Spanish Superior Court of Justice of Madrid denies tax exemption for a compensation for dismissal which had been paid with a State aid (Central Administration)

Factual Background: Appeal by a worker who voluntarily accepted to be paid compensation for dismissal by joining employment regulation proceedings ("ERP"). The funding for the ERP came from state aid. The worker subsequently claimed compensation for unfair dismissal. The appeal was rejected by the Superior Court of Justice of Madrid ("the Court"). Summary of the Court's findings: The appellant sought annulment of the administrative resolution pursuant to which he was denied the chance to recoup overpaid income tax in relation to the previous year. The appellant alleged that the tax settlement made by the company Iberia (the worker's employer) was erroneous, since it did not consider that his dismissal to be part of the company's restructuring plan, which was financed by State aid.

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Casto Gonzalez-Paramo, Sonia Perez Romero, The Spanish Superior Court of Justice of Madrid denies tax exemption for a compensation for dismissal which had been paid with a State aid (Central Administration), 28 May 2007, e-Competitions May 2007, Art. N° 26971

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