Skip to content
Back to index
V0216-18 31 January 2018 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del trabajo

30% reduction in employment income requires a generation period exceeding two years and other requirements

A company has requested a ruling on whether variable remuneration linked to strategic plan objectives (2017-2020) qualifies for the 30% reduction under Article 18.2 of the Personal Income Tax Act (LIRPF). The Directorate General for Taxes (DGT) states that this cannot be determined with the information provided, but outlines the necessary requirements for its application.

The question raised

Whether the 30% reduction provided for in Article 18.2 of the Personal Income Tax Law shall apply to remuneration linked to the achievement of objectives in accordance with the 2017-2020 strategic plan.

The DGT's ruling

To apply the 30% reduction, the income must have a generation period exceeding two years, be imputed to a single tax period, and the said reduction must not have been applied to other income with a generation period exceeding two years in the five previous tax periods. The reduction shall not apply if it constitutes a mere deferral of the enforceability of annual remuneration. The maximum amount subject to the reduction is 300,000 euros per year.

Book your free first meeting