Taxation of back pay for the 2023 GDP increase in the 2024 tax year
The Dirección General de Tributos (DGT) has issued a relevant ruling regarding the temporal imputation of income from employment in Personal Income Tax (IRPF), specifically concerning salary increases linked to the growth of the Gross Domestic Product (GDP).
What the DGT has ruled
The inquiry addresses the question of when back pay derived from the GDP increase corresponding to the year 2023 must be taxed. According to the resolution, this income must be imputed to the tax period in which it becomes due, which occurs in the 2024 tax year.
The criterion is based on the fact that the enforceability of this income does not occur in 2023, but rather following the publication of GDP data by the Instituto Nacional de Estadística (INE), the subsequent agreement by the Council of Ministers, and its publication in the Boletín Oficial del Estado (BOE). Therefore, they are not considered income that the taxpayer could have demanded during the year 2023.
What this means for you
This ruling directly affects public sector workers who receive retroactive salary increases based on GDP evolution. Although the increase refers to the economic activity of 2023, the tax obligation arises in 2024.
For the taxpayer, this implies that these additional earnings will be included in the IRPF taxable base of the year in which the right to payment is formalized, and not in the year to which the economic data that originated them correspond. The regulations applied for this analysis include Law 35/2006 on IRPF and Law 31/2022 on the General State Budgets for 2023.
What you should do
It is necessary to verify the exact moment when any retroactive remuneration becomes due to ensure correct reporting during the tax campaign. Since temporal imputation depends on administrative acts and official publications, correctly identifying the fiscal year is fundamental to avoid errors in the tax settlement. It is recommended to assess each particular situation to confirm the applicable tax treatment for your income.
Frequently asked questions
- Why are they not taxed in 2023 if the increase is due to the GDP of that year?
- Because the income was not due in 2023; it only becomes due after the publication of the data and the official agreement in 2024.
- Who does this resolution primarily affect?
- Public sector workers who receive retroactive salary increases based on GDP.