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V2611-21 27 October 2021 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del trabajo

Payments for holidays, overtime and extraordinary bonuses upon termination of employment are subject to Income Tax (IRPF) withholding

An executive enquired whether amounts received for untaken holidays, overtime and the proportional part of the extraordinary bonus following the termination of their employment relationship were subject to Income Tax (IRPF) withholding. The Directorate General for Tax (DGT) responds that these amounts constitute employment income and must be subject to the corresponding withholding tax.

The question raised

Subjectivity to withholding tax on account of Personal Income Tax (IRPF) regarding the remuneration received.

The DGT's ruling

Remuneration for untaken holidays, overtime, and the proportional part of the extraordinary bonus derived from an employment relationship constitute income from employment. Given their nature as personal income from employment, they are fully subject to taxation and to the obligation to apply withholding tax on account of Personal Income Tax (IRPF).

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