Severance Pay Is Excluded from Income Tax

Labor Courts have confirmed the prevailing rule in re Negri, whereby the Supreme Court found that the amounts paid to employees in excess of the statutory severance pay under the Employment Contract Act [Ley de Contrato de Trabajo] were not subject to Income Tax and in this particular case, ordered the Employer to return the withheld amount plus interests and court costs. The Company will now have to seek refund from the Tax Authority [AFIP], who collected the withholding at the time.

Published in El Cronista on March 12, 2019
Remember that in previous cases the Defendant used to be the Tax Authority, who was sued to recover withholdings made by the Employer. In this case, the Employer was sued by the Employee, and the Court did not accept to summon the Tax Authority as a third party. Seguir leyendo Severance Pay Is Excluded from Income Tax