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A doctor enquired as to which tax year should apply to back pay received for professional career progression covering the years 2019 to 2021. The Directorate General for Taxes (DGT) ruled that such payments must be taxed in the year in which the administrative resolution recognises the right to receive them.
This ruling clarifies the timing of tax liability for retroactive salary increases, confirming that the tax obligation arises upon the formal recognition of the right to payment rather than the period to which the payments relate.
The tax team reviews your specific situation.
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