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V0108-21 28 January 2021 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · imputación temporal

Back pay from court rulings is attributed to the year the judgment becomes final and may qualify for the 30% reduction

A doctor received unpaid wages following a final court ruling. The DGT has determined that such back pay is attributed to the tax year in which the judgment becomes final and may benefit from the reduction for generation periods exceeding two years.

The question raised

Issue raised: Taxation under Personal Income Tax (IRPF).

The DGT's ruling

Arrears for unpaid remuneration due to a pending judicial ruling are imputed to the tax period in which the judgment becomes final. As it is a generation period exceeding two years, the 30% reduction under Article 18.2 of the Personal Income Tax Law applies, provided it has not been applied in the previous five periods. Late payment interest, due to its compensatory nature, is taxed as capital gains in the period in which it is quantified and its payment is agreed, being integrated into the savings tax base.

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