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V1385-17 5 June 2017 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · imputación temporal

Retention bonuses must be reported in the years they become due and do not qualify for the 30% reduction

An employee sought guidance on how to tax a retention bonus received in 2016 following a payment instalment plan. The DGT ruled that income must be reported in the years each instalment became due and that the reduction for income with a generation period exceeding two years does not apply.

The question raised

Taxation of the aforementioned supplement.

The DGT's ruling

The temporal imputation of income from employment is determined by its exigibility, understood as the moment when the recipient can claim payment according to existing agreements. In this case, the supplement must be imputed to the periods of 2013, 2014, 2015, and 2016. The reduction provided in Article 18.2 of the Personal Income Tax Law does not apply because the condition that the collective agreement establishing the supplement must cover a generation period exceeding two years is not met.

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