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V1747-22 22 July 2022 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · imputación temporal

Back pay awarded by court ruling is attributed to the year the judgment becomes final

A civil servant enquired whether back pay for three years, received via a court ruling, should be taxed in the year it was earned or the year it was collected, and whether the 30% reduction could be applied. The DGT ruled that such income is attributed to the year the judgment becomes final and that the reduction applies if all legal requirements are met.

The question raised

Taxation of back pay received. Application of the reduction provided for in Article 18.2 of the Income Tax Law.

The DGT's ruling

Income from employment pending judicial resolution is attributed to the tax period in which the judgment becomes final. The 30% reduction for a generation period exceeding two years is applicable if the income corresponds to more than two years and no similar reductions have been applied in the previous five tax periods. The withholding certificate must include the income paid during the fiscal year, without the need to itemize the years of generation.

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