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V0830-21 7 April 2021 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del trabajo

Back pay for professional career progression must be attributed to the period it was due and may qualify for the 30% reduction

A civil servant inquired about the taxation of back pay for a professional career progression supplement received in 2020 but relating to previous years. The Directorate General for Taxes (DGT) ruled that such payments must be attributed to the period in which they were due and analysed the application of the reduction for income with a generation period exceeding two years.

The question raised

Taxation of the aforementioned arrears in Personal Income Tax (IRPF).

The DGT's ruling

Arrears must be attributed to the tax period in which they become due, according to the administrative resolution of recognition. If they are received in a period different from that of their due date due to circumstances not attributable to the taxpayer, a supplementary self-assessment must be filed without penalties or interest. The 30% reduction is applicable if the generation period exceeds two years and no other similar reductions have been applied in the previous five periods. Amounts unduly received that must be reimbursed should not be included in Personal Income Tax (IRPF) self-assessments.

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