Workers may apply the 30% reduction on productivity bonuses under strict conditions

The application of the 30% reduction on employment income derived from productivity bonuses is subject to compliance with specific requirements regarding duration and amount. The Dirección General de Tributos (DGT) has specified the conditions that must be met for this tax benefit to be applicable in the Personal Income Tax (IRPF) return.

What the DGT has ruled

For employment income to benefit from this reduction, the administration's criteria are based on the nature of how said income is generated. The DGT establishes that:

• Generation period: The income must be linked to a generation period exceeding two years. This implies that both the worker's seniority in the company and the collective agreement or contract establishing the bonus must cover a minimum period of two years.
• Frequency limit: This reduction cannot have been applied to other income of the same nature in the previous five tax periods.
• Amount limit: The amount of income to which the reduction is applied cannot exceed 300,000 euros annually.

What this means for you

If you receive productivity bonuses due to seniority or other similar concepts, it is not enough for the amount to appear on your payslip to apply the reduction. It is necessary to verify that the structure of your contract or the collective agreement regulating your activity guarantees that said income is generated over a period exceeding two years. If the bonus is annual in nature or is not linked to consolidated seniority, you will not be able to apply this tax benefit.

What you should do

It is necessary to analyze the composition of your salary components and the labor regulations applicable to your position. You should check whether the productivity bonus meets the multi-year generation requirement and whether you have used this benefit in the last five years. Since the interpretation of the regulations depends on the exact nature of each contract, it is recommended to assess your particular situation to avoid errors in your tax settlement.