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V2320-22 4 November 2022 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · retención

Income tax withholding applies to extraordinary pension payments

A query was raised regarding whether income tax withholding should be applied to the extraordinary payments of a retirement pension. The Directorate General for Taxes (DGT) ruled that when calculating the total amount of remuneration, both fixed and predictable variable payments, including extraordinary payments, must be included.

The question raised

Whether it is appropriate to apply withholding regarding the extraordinary payments of said pension.

The DGT's ruling

To calculate the withholding rate, the total amount of employment income must include the sum of the monetary or in-kind remuneration that the taxpayer will normally receive during the calendar year, including extraordinary payments. If the total amount received during the year, including said payments, exceeds the exclusionary limit for the obligation to withhold, the entire income is subject to withholding.

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