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V3074-18 28 November 2018 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del trabajo

Judicial compensation for lack of rest is taxed as employment income in the year the ruling becomes final

A tax consultant inquired whether economic compensation received following a judicial sentence after years of lack of rest should be taxed in the year of receipt or in the year of the sentence. The DGT responds that they must be attributed to the tax year in which the judicial resolution became final.

The question raised

Taxation of compensations under Personal Income Tax (IRPF). Temporal attribution. Application of the reduction provided for in Article 18.2 of the Tax Law.

The DGT's ruling

Compensation for lack of rest constitutes employment income and must be attributed to the tax period in which the judicial resolution recognizing the right becomes final. The 30 percent reduction provided for in Article 18.2 of the LIRPF is not applicable because the income is not included in the list provided by the Tax Regulation, nor does it cover a generation period exceeding two years.

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