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V1169-22 26 May 2022 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del trabajo

Back pay for professional career progression is attributed to the year the administrative resolution is issued

A doctor enquired as to which tax year should apply to back pay received for professional career progression covering the years 2019 to 2021. The Directorate General for Taxes (DGT) ruled that such payments must be taxed in the year in which the administrative resolution recognises the right to receive them.

The question raised

Temporal attribution of the aforementioned back pay.

The DGT's ruling

Professional career back pay constitutes earned income from employment and is attributed to the tax period in which it becomes due. As it derives from an administrative resolution rather than a judicial sentence, enforceability arises when the right is recognized through said resolution. If the generation period exceeds two years and is attributed to a single period, the 30% reduction provided in Article 18.2 of the Personal Income Tax Law may be applicable, provided that similar reductions have not been applied in the previous five periods.

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