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V2068-24 25 September 2024 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · deducción por residencia habitual

Income tax withholding for residents in La Palma can be reduced by 60%

A company has requested clarification on whether it should apply a 60% reduction to the income tax (IRPF) withholdings for staff residing in La Palma. The Directorate General for Taxes (DGT) has ruled that, following amendments to the Personal Income Tax Law (LIRPF), residents of this island are entitled to the same deductions and withholding reductions as those in Ceuta and Melilla.

The question raised

Regarding its personnel residing on the Island of La Palma, it is questioned whether the withholdings applied to their payroll should be reduced by 60 percent.

The DGT's ruling

For the tax periods 2022, 2023, and 2024, the deduction for residence in La Palma is applicable under the same terms as in Ceuta and Melilla. In 2024, this measure serves to determine the withholding rate and payment on account regarding income paid as of the entry into force of Royal Decree-Law 4/2024. The payer may regularize the withholding rate on the first labor income payments made after said date.

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