Taxation of late payment interest on wage claims in Personal Income Tax

The Directorate General of Taxes (DGT) has issued a relevant ruling regarding the tax nature of late payment interest received by workers after obtaining a court judgment for the claim of their wages. This resolution defines the category of this income within Personal Income Tax (IRPF).

What the DGT has ruled

The query presented consisted of determining whether the interest provided for in Article 29.3 of the Workers' Statute, received through a final judgment, should be taxed as income from work or as capital gains. The binding body has ruled that this interest has a compensatory purpose, intended to redress damages and losses derived from the delay in payment.

Therefore, the DGT establishes that, due to its nature, it does not constitute income from movable capital or income from work. Following the doctrine of the Supreme Court, these amounts must be classified as capital gains, in accordance with Articles 25 and 33.1 of the IRPF Law.

What this means for you

If you are a worker who has obtained a court judgment to claim unpaid wages and, as a consequence, receives late payment interest, you must take into account that this income will not be included in the income from work tax base. As they are considered capital gains, their tax treatment is different. It is fundamental to understand that their objective is to compensate for the economic loss suffered and not to represent consideration for the work performed.

What you should do

Upon receiving these amounts, it is necessary to ensure their correct inclusion in your tax return. As they are capital gains, they must be included in the general tax base and not in the savings tax base. Since the classification of this income depends on the nature of the judgment and the concept of the payment, it is recommended to assess each particular situation to ensure that the tax settlement complies with current regulations.