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A civil servant inquired whether salary supplement arrears awarded by a court ruling are subject to the 40% reduction for having a generation period exceeding two years. The Directorate General of Taxes (DGT) ruled that this reduction does not apply.
This ruling clarifies that salary arrears awarded via judicial sentence do not qualify for the 40% reduction for income generated over more than two years, affecting how backdated payments are taxed.
The tax team reviews your specific situation.
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