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V2501-14 24 September 2014 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · salarios de tramitación

Back pay from legal proceedings must be attributed to the tax year the court ruling becomes final

A worker inquired when to declare back pay following the annulment of a collective redundancy procedure (ERE) and which withholding tax to apply. The DGT ruled that income must be attributed to the year the court ruling becomes final and, since payment occurs in a subsequent year, it is treated as back pay.

The question raised

Income from employment. Processing wages. Temporal attribution. Withholdings.

The DGT's ruling

Processing wages are income from employment that are attributed to the tax period in which the judicial ruling determining the right to their receipt becomes final. When paid in a tax period subsequent to the period of their attribution, these amounts are considered arrears, applying a withholding tax rate of 15 percent. The withholding must be applied at the time of payment and the taxpayer must attribute the withholdings to the period to which the income is attributed.

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