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V2924-21 19 November 2021 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del trabajo

A 15% withholding tax rate applies to employment income paid in a financial year following the final court ruling

A query was made regarding the applicable withholding tax rate for employment income awarded by a court ruling and paid in a different year from its accrual. The Directorate-General for Taxes (DGT) ruled that, as these are back payments, a 15% withholding tax rate must be applied.

The question raised

Applicable withholding rate.

The DGT's ruling

Income from employment determined by judicial sentence is imputed to the tax period in which the resolution becomes final. Since the obligation to withhold arises when the income is satisfied, if the payment occurs in a tax year subsequent to the finality, it is considered an arrears payment. Therefore, the 15% withholding rate provided for in Article 80.1.5 of the IRPF Regulation shall apply.

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