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A member of the military has requested clarification on how to tax back pay received following a court ruling that overturned their discharge from the Armed Forces. The Directorate General for Taxes (DGT) has indicated that such income must be declared in the year the judgment becomes final and that the reduction for non-recurring income may apply.
This ruling clarifies the timing for tax reporting back pay resulting from legal disputes, ensuring taxpayers know which fiscal year to declare such income and confirming eligibility for specific tax reductions.
The tax team reviews your specific situation.
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