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A query was raised regarding the taxation of back pay following the annulment of a dismissal and whether it can be treated as arrears to qualify for a tax reduction. The DGT ruled that such amounts are attributed to the tax year in which the judgment becomes final and, if they cover a period exceeding two years, the 30% reduction may apply.
This ruling clarifies the timing of tax liability for back pay resulting from voided dismissals and confirms the eligibility for the 30% reduction for arrears covering more than two years.
The tax team reviews your specific situation.
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