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V0752-16 25 February 2016 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del trabajo

Back pay from court rulings is attributed to the year the judgment becomes final

A trainee civil servant has requested clarification on how to tax back pay received in 2015 following a 2013 court ruling. The Directorate General for Taxes (DGT) indicates that amounts corresponding to the period prior to the ruling must be attributed to the year the judicial decision becomes final.

The question raised

Taxation for Personal Income Tax purposes of the amounts received.

The DGT's ruling

Income from employment pending judicial resolution is attributed to the tax period in which the judgment becomes final. If this income covers a period exceeding two years, the 40% reduction for non-periodic income shall apply. Income accrued from the judgment until payment is attributed to the year in which it becomes due, without entitlement to the 40% reduction.

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