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V2164-24 9 October 2024 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · salarios de tramitación

Back pay is taxed in the year the judgment becomes final and is not eligible for the 30% reduction

A query was raised regarding when judicially recognised back pay must be taxed and whether the reduction for irregular income can be applied. The DGT has determined that such amounts are attributed to the tax year in which the judgment becomes final and that the reduction under Article 18.2 LIRPF does not apply, as the period of generation does not exceed two years.

The question raised

Temporal imputation of the amounts corresponding to back pay and application of the reduction contemplated in Article 18.2 of the Personal Income Tax Law.

The DGT's ruling

Back pay is imputed to the tax period in which the judicial sentence recognizing the right to its receipt becomes final. The 30% reduction provided for in Article 18.2 of the Personal Income Tax Law is not applicable because the back pay in this case corresponds to a generation period not exceeding two years.

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