Retroactive salary increases shall be imputed to the year in which they become due

The management of salary increments derived from inflation or the negotiation of collective agreements raises a key question regarding the timing of their declaration in Personal Income Tax (IRPF). When an increase has retroactive effects, the doubt arises as to whether it should be taxed in the year to which the economic effects correspond or in the year in which the money is received.

What the DGT has resolved

The Dirección General de Tributos (DGT) has determined that income from employment must be imputed to the tax period in which it becomes due. In the specific case of increments linked to the Consumer Price Index (IPCA) or collective agreements with retroactive effects, enforceability does not occur in the year intended to be compensated, but at the moment when the legal or contractual conditions for its collection are met.

This means that enforceability materializes in the year in which the official data is published or the agreement is signed. For example, if an increase has economic effects from 2024 but enforceability occurs in 2025, the entire amount must be imputed to the 2025 fiscal year.

What this means for you

For workers, this implies that income received as retroactivity should not be included in the previous year's tax return, even if the money refers to periods that have already passed. This distinction is fundamental to avoid errors in the IRPF settlement and to ensure that the declared taxable base is correct according to current regulations.

What you should do

It is necessary to precisely identify the moment when the right to collect the salary increase becomes due. Taxpayers must verify whether the increase responds to an inflation update or a new collective agreement to determine the corresponding fiscal year. Since imputation depends on the date of enforceability, it is essential to have the documentation that proves when these rights became effective to avoid discrepancies with the Tax Administration.