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V1161-20 29 April 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del trabajo

30% reduction for irregular income may apply if compensation is attributed to a single period

A pensioner inquired whether replacing a monthly supplement with a lump sum or staggered payments allows for the application of the reduction under Article 18.2 of the Personal Income Tax Act (LIRPF). The Directorate General for Taxes (DGT) ruled that the reduction is applicable provided the compensation is attributed to a single tax period.

The question raised

Upon the entity proposing the substitution of the monthly supplement for a single payment or one split into up to five annuities, it asks about the application of the reduction under Article 18.2 of Law 35/2006.

The DGT's ruling

Compensation for the suppression of a periodic and life-long supplement is considered income from employment obtained in a notoriously irregular manner over time. To apply the 30 percent reduction, said compensation must be imputed to a single tax period. This reduction is not limited by the rule of the five previous periods, as this only affects income with a generation period exceeding two years.

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