Employee Transfer in Dissolution: Payment for Future Severance Is Taxable Service Subject to VAT

• The payment made by a dissolving company to another entity for assuming future employee severance costs is considered a taxable service subject to 21% VAT, not a non-taxable indemnity.
• The VAT paid on this service can be deducted if general requirements are met.
• The expense may be deductible for Corporate Income Tax purposes if it is properly accounted for, justified, accrued, and not classified as a non-deductible expense.
• The new company must invoice the service with VAT, reflecting the legal and economic relationship between the parties.

Source: allyon-etl.es

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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