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V0784-24 17 April 2024 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · phantom shares

Phantom share payments classified as employment income and ineligible for 30% reduction

An executive director sought clarification on whether payments received from a phantom share plan following a liquidity event should be taxed as employment income and if the reduction for irregular income could be applied. The DGT has ruled that these are employment income amounts due in the year of the liquidity event and that the 30% reduction does not apply.

The question raised

Taxation of the amount received by the taxpayer in 2023.

The DGT's ruling

Remuneration for directors and members of boards of directors constitutes income from employment. The amount for phantom shares is exigible when the liquidity event occurs and must be attributed to the tax period in which it becomes exigible. The granting of phantom shares does not constitute income, but rather the recognition of a right. The 30% reduction is not applicable because they are not considered notoriously irregular income nor do they have a generation period exceeding two years.

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