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V2472-21 29 September 2021 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · retenciones

The 2% minimum withholding rate does not apply to indefinite employment contracts

A query was raised regarding whether the 2% minimum withholding rate should be applied when annual earnings do not reach the withholding threshold. The Directorate General for Tax (DGT) has ruled that this minimum rate applies only to contracts with a duration of less than one year.

The question raised

Question posed: As the consultation document indicates that withholdings are not required due to the amount of remuneration to be paid in 2021, it is asked whether the 2 percent minimum rate is operational.

The DGT's ruling

The 2 percent minimum rate under Article 86.2 of the RIRPF only applies to contracts or relationships with a duration of less than one year. In the case of a civil servant with an indefinite-term relationship, the withholding rate is determined by the general procedure. Therefore, the 2 percent minimum rate is not applicable, and the exclusionary limit for the obligation to withhold does apply.

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