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V2484-14 23 September 2014 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del trabajo

Wage differences awarded by court ruling are attributed to the year the judgment becomes final

A taxpayer inquired about the taxation of amounts received in 2013 for wage differences from previous years following a court ruling. The DGT ruled that these must be attributed to the period in which the judgment becomes final and details the applicable reduction and withholding rules.

The question raised

Taxation for Personal Income Tax purposes of the amounts received.

The DGT's ruling

Income from employment pending judicial resolution is attributed to the tax period in which the judgment becomes final. If this income covers a generation period exceeding two years, the 40 percent reduction is applied. Earnings accrued from the judgment until payment are attributed to the year of their exigibility without reduction. For payments made in a period different from that of their exigibility, a withholding tax rate of 15 percent shall apply to arrears.

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