Taxation of salary increases linked to GDP evolution in Personal Income Tax

The Directorate General of Taxes (DGT) has issued a relevant ruling regarding the temporal imputation of income from employment, specifically concerning salary increases linked to the evolution of the Gross Domestic Product (GDP).

What the DGT has ruled

The inquiry focused on determining in which fiscal year the 0.5% increases derived from GDP evolution must be taxed. The DGT has established that income from employment is imputed to the tax period in which it becomes due. In this specific scenario, the right to payment does not arise in 2023, but in 2024.

This is because the right to payment arises following the publication of GDP data by the National Statistics Institute (INE), the subsequent agreement by the Council of Ministers, and its official publication in the Official State Gazette (BOE). Therefore, the administration considers that these are not 2023 earnings received late, but rather earnings whose right to payment properly arises in the 2024 tax year.

What this means for you

This ruling has a direct impact on public employees who receive salary increases linked to the country's economic evolution. If you are one of these taxpayers, you must take into account that this additional income should not be declared in the tax return corresponding to the previous year, but in the 2024 tax year declaration.

This distinction is fundamental to avoid errors in the imputation of income and to ensure that the declared taxable base coincides with the moment when the right to collection becomes effective and legally due in accordance with current regulations.

What you should do

It is necessary to verify the exact moment of the publication of the agreements and data that trigger the right to the salary increase. Since the regulations of Law 35/2006 and Law 31/2022 govern the imputation of this income, it is important to monitor publications in the BOE to determine the correct fiscal year. It is recommended to assess your particular situation to ensure that your tax return correctly reflects the due date of these earnings.