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V3276-18 26 December 2018 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del trabajo

Cash payments for company performance are treated as employment income without reduction

An executive inquired whether a cash payment received due to the company's strong results constitutes a capital gain or employment income subject to the reduction for irregular income. The DGT ruled that it is employment income and that the individual is not entitled to the 30% reduction.

The question raised

Whether the amount received can be considered a capital gain and, in the event it is considered employment income, whether the reduction established for irregular income would apply to it.

The DGT's ruling

Cash amounts paid by a company to an executive due to good results are classified as employment income and not as capital gains. As they do not meet the criteria for notoriously irregular acquisition under the IRPF Regulations nor do they have a generation period exceeding two years, the 30% reduction provided for in Article 18.2 of the LIRPF is not applicable.

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