Skip to content
Back to index
V4878-16 11 November 2016 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · intereses por mora

Late payment interest on wages taxed as capital gains and not subject to withholding

A query was raised regarding whether the 10% interest for late wage payments, as provided for in the Workers' Statute, should be subject to tax withholding. The Directorate General for Taxes (DGT) ruled that, as these are compensatory interest payments, they are taxed as capital gains rather than as income from movable capital.

The question raised

Subject to withholding of the interest under Article 29.3 of the Workers' Statute.

The DGT's ruling

Interest for late payment of wages is compensatory in nature as it compensates for damages arising from non-compliance. Therefore, it does not constitute income from movable capital, but must be taxed as capital gains pursuant to Articles 25 and 33.1 of Law 35/2006. As it is not income subject to withholding under Article 75 of the IRPF Regulations, no withholding is applicable to them.

Book your free first meeting