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V1110-21 27 April 2021 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del trabajo

Backdated professional career increments are taxed in the period they become due and may qualify for the 30% reduction

A civil servant inquired about the taxation of professional career increments received in 2020 that related to previous years. The Directorate General for Taxes (DGT) ruled that these must be attributed to the period in which they became due and may benefit from the reduction applicable to 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 are considered income from employment and their temporal imputation must be made to the tax period in which they become due, as determined by the administrative resolution of recognition. If they are imputed to a period prior to their receipt, a supplementary tax return must be filed. Likewise, 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.

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