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V0868-22 21 April 2022 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · imputación temporal

Salary arrears recognised by court ruling are attributed to the year the ruling becomes final

A taxpayer enquired about when to tax salary increases from previous years that were recognised via a court ruling. The DGT clarifies that these must be attributed to the tax year in which the ruling becomes final, and analyses the applicable reduction and withholding tax.

The question raised

Personal Income Tax (IRPF) taxation: temporal imputation, reduction under Article 18.2 of Law 35/2006, and applicable withholding.

The DGT's ruling

Income from employment pending judicial resolution is imputed to the tax period in which the judgment becomes final. If the generation period exceeds two years and is imputed in a single fiscal year, the 30% reduction under Article 18.2 of the LIRPF applies, provided that such reduction has not been applied in the previous five tax periods. For arrears attributable to previous fiscal years, the applicable withholding rate is 15%. If the failure to withhold is a cause attributable exclusively to the withholding agent, the recipient may deduct the amount that should have been withheld.

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