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V2068-20 23 June 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 imputed to a single tax period

A former bank employee inquired whether replacing a monthly pension supplement with a lump sum or staggered payments allows for the 30% reduction under Article 18.2 of the Personal Income Tax Act (LIRPF). The Directorate General for Taxes (DGT) ruled that the reduction is only applicable if the lump sum option is chosen and the income is imputed to a single tax period.

The question raised

Upon the entity proposing the substitution of the monthly supplement with a single payment or installments of up to five annual payments, 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 salary supplements or indefinite-term pensions is considered income from work obtained in a notoriously irregular manner. To apply the 30% reduction, the regulations require that such income be imputed to a single tax period. Therefore, installment payments do not allow access to this reduction. This application is not affected by having applied the reduction in the previous five years, as said exclusion only applies to income with a generation period exceeding two years.

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