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V1002-16 14 March 2016 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del trabajo

Back pay awarded by court ruling is attributed to the tax year in which the judgment becomes final

A trainee civil servant has requested clarification on how to tax back pay received via a court ruling after being declared unfit for the role. The Directorate General for Taxes (DGT) has determined that amounts corresponding to the period prior to the ruling must be attributed to the year in which the judgment 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 spans more than two years, the 40% reduction for generation exceeding two years applies. Income accrued from the judgment until payment is attributed to the period in which it becomes due, without the 40% reduction.

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