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A taxpayer has enquired about the correct declaration of salary difference payments and legal interest received following a court order. The DGT has determined that wages must be attributed to the year the ruling becomes final, while compensatory interest is treated as a capital gain in the year it is quantified.
This ruling clarifies the timing for tax reporting regarding judicial settlements, distinguishing between employment income and capital gains based on when the legal obligation becomes definitive or quantified.
The tax team reviews your specific situation.
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