Imputation of salary differences: the key distinction between judicial rulings and agreements

The Directorate General of Taxes (DGT) has issued a relevant criterion regarding the temporal imputation of income derived from salary differences in Personal Income Tax (IRPF). The central issue lies in determining in which tax year the income must be declared and which withholding regime should be applied based on the origin of the right to said income.

What the DGT has ruled

The criterion establishes a fundamental distinction based on the nature of the right that originates the economic perception:

• Judicial ruling: If the right to the income stems from a judicial ruling, the imputation must be made in the period in which said ruling becomes final.
• Agreement between parties: If the right does not depend on a judicial ruling but rather on an agreement, the imputation is made at the moment the amounts become enforceable. This may correspond to the years in which the salary differences were generated or to the year in which the agreement is formalized and the money is received.

Furthermore, the DGT clarifies that the 30% reduction for irregular income from employment is not applicable, given that a generation period of more than two years is not exceeded. The applicable withholding will depend strictly on the determined temporal imputation.

What this means for you

For the worker, this criterion defines the exact moment when these amounts must be included in their tax return. Receiving a payment derived from a won litigation is not the same as receiving one resulting from collective bargaining or a private agreement. The origin of the right conditions both the affected tax year and the type of withholding that the company will apply to the payroll.

What you should do

It is necessary to precisely identify the origin of the salary compensation received. If the amount comes from a judgment, the date it becomes final must be observed. If it comes from an agreement, the date the amounts become enforceable must be verified. Since the application of withholding varies according to the case, it is fundamental to assess each particular situation to ensure the correct declaration of income in the corresponding tax year.