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V0609-20 30 March 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos de actividades económicas

Income from services provided over several years must be recognised using the accrual basis or degree of completion

A lawyer seeks advice on whether fees from long-running legal proceedings should be taxed in the year they are collected or spread over time. The DGT rules that, unless the cash basis is chosen, the accrual basis must be applied.

The question raised

Whether it is correct to tax such professional activity income in the fiscal year of collection, or whether, on the contrary, they must be distributed among the fiscal years spanning the duration of the procedures from which they derive.

The DGT's ruling

Unless the taxpayer has opted for the cash basis, income from economic activities is imputed according to the accrual basis. For services provided over several years, the income shall be imputed by applying the accrual rules or, if the requirements of accounting regulations are met, the proportion corresponding to the degree of completion in each financial year. These are not installment operations or operations with deferred pricing, therefore accrual is the general rule.

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