Imputation of wages due to null dismissal: when to declare the amount

The Directorate General of Taxes (DGT) has issued a relevant criterion regarding the temporal imputation of employment income derived from judicial proceedings for null dismissal. This resolution addresses the uncertainty regarding which tax year should bear the tax burden when the amount of income depends on a judicial ruling.

What the DGT has ruled

The administration establishes that, although employment income is imputed to the tax period in which it is due, there is an exception when the amount is subject to a pending judicial resolution. In these cases, back pay must be imputed to the tax year in which the ruling becomes final.

Likewise, the criterion addresses the situation of workers who, after being reinstated, must repay the unemployment benefits received during the period of separation. The DGT determines that the repayment of said benefits does not affect the tax year in which the reimbursement is made, but must be accounted for in the period in which they were originally declared as income.

What this means for you

If you are a taxpayer who has obtained financial compensation through a judicial ruling, the timing of your declaration will not necessarily be when the money is received, but the year in which the ruling becomes final. This is fundamental to avoid errors in the settlement of Personal Income Tax (IRPF).

On the other hand, if you must repay unemployment benefits due to reinstatement, you should not treat that reimbursement as an expense or a reduction in the current tax year; instead, you must correct the situation in the tax year in which you received said benefits. If the tax draft contains erroneous data derived from these movements, you have the power to request its rectification or file your own tax return.

What you should do

In the event of a judicial ruling of this type, it is necessary to:

• Identify the exact date on which the ruling becomes final to determine the correct tax year.
• Verify if there are unemployment benefits that must be repaid and locate the tax year in which they were declared.
• Check the accuracy of the data reflected in the Tax Agency's draft to ensure that the temporal imputation is appropriate.