Imputation of employment income: the importance of enforceability

The Directorate General of Taxes (DGT) has issued a relevant ruling regarding the timing of the declaration of employment income. The central issue lies in determining which tax period the taxpayer must declare both the income obtained and the withholding applied to them.

What the DGT has resolved

The administration establishes that the temporal imputation of employment income occurs in the period in which it becomes enforceable for the recipient. This criterion is decisive if, due to circumstances beyond the taxpayer's control, actual collection occurs in a different fiscal year from its enforceability. In such cases, the income must be imputed to the period in which it was enforceable.

Furthermore, the resolution emphasizes that the withholding must be imputed to the same period in which the income is imputed, regardless of when it was actually applied.

What this means for you

For the taxpayer, this criterion implies that the cash basis (the moment of collection) is not what governs the tax obligation in Personal Income Tax (IRPF), but rather the accrual or enforceability basis. This means that:

• If income was enforceable in 2024, it must be declared in the 2024 tax return, even if the money is received in 2025.
• The withholding associated with that income must be applied to the same fiscal year in which the income is declared.
• Professionals must precisely identify the moment of enforceability to avoid errors in their IRPF declaration.

For companies, although the impact is indirect, the paying entity must consider the enforceability of the payment to ensure the correct imputation of the expense.

What should be done

It is necessary to analyze the nature of the income and the exact moment when the right to receive it arises. It is recommended to verify that the documentation proving enforceability coincides with the period declared in the IRPF to avoid discrepancies with the Tax Agency. Each situation must be assessed individually to determine the correct fiscal year.