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V1128-24 23 May 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% tax reduction

A former CEO has requested clarification regarding the taxation of an amount received through a phantom share plan following a liquidity event. The Directorate General for Taxes (DGT) has ruled that these payments constitute employment income due in the year of the event and are not eligible for the tax reduction for irregular income.

The question raised

Taxation of the amount received by the taxpayer in 2023.

The DGT's ruling

Remuneration for directors and chief executive officers constitutes income from employment. The amount of a phantom share plan is exigible when the liquidity event provided for in the plan occurs. The 30% reduction under Article 18.2 of the Personal Income Tax Law (LIRPF) is not applicable because such amounts are not considered income obtained in a notoriously irregular manner, nor do they meet a generation period exceeding two years from their vesting.

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