Limits on the 30% Personal Income Tax (IRPF) reduction for unused holidays
The application of the reduction established in Article 18.2 of Law 35/2006 (LIRPF) for employment income generated over periods exceeding two years has been the subject of a recent clarification by the Dirección General de Tributos (DGT). The debate focuses on whether amounts received as compensation for unused holidays can benefit from this tax relief under certain imputation conditions.
What the DGT has ruled
In this specific case, the DGT has ruled that the 30% reduction does not apply to amounts corresponding to holidays pending use. The main reason lies in the nature of the imputation of said income. The inquiry raised whether salary differences for 2022 holidays should be imputed to the 2024 tax year. However, the tax authority pointed out that, since they had already been settled in the December 2022 severance payment, the rule of imputation by judicial resolution necessary for this scenario is not met.
As there is no imputation that allows for a continuous generation period exceeding two years, the requirement to apply the reduction under Article 18.2 of Law 35/2006 is not satisfied.
What this means for you
This criterion directly affects workers who receive amounts for unused holidays, especially when these derive from judicial processes. If the holiday amounts were already settled and taxed in a previous tax year (such as in a severance payment), it is not possible to "transfer" their generation to a later period to attempt to reach the two-year threshold required by the regulations to obtain the 30% reduction.
What you should do
It is fundamental to precisely analyze the timing of the settlement of the amounts received. The distinction between when rights are generated and when they are effectively settled is decisive for the application of tax benefits. It is recommended to assess each particular situation, especially in cases of judicial rulings affecting accumulated salary concepts, to determine the correct tax year for imputation according to Law 35/2006 and Law 58/2003 General Tax Law.
Frequently asked questions
- What does Article 18.2 of Law 35/2006 establish?
- It establishes a 30% reduction for employment income generated over periods exceeding two years.
- Why was the reduction not applied in this case?
- Because the holidays had already been settled in the 2022 severance payment, preventing them from being imputed to a later period that would meet the two-year requirement.