The Supreme Court agrees with the Tax Agency and forces a pensioner to pay taxes at once in a single year for all the personal income tax arrears of her disability pension that she collected after winning a lawsuit against Social Security. The ruling says that, by law, he cannot distribute that money in the statements of the years he was unpaid, but rather he must declare everything in the year in which justice ruled in his favor. By accumulating so much income in a single fiscal year, the taxpayer had a payable result of 5,436.72 euros.
It all begins when Social Security withdraws her disability pension in 2013, whose usual profession was a stocking cashier, claiming that she had noticed an improvement in her ailments. Dissatisfied with this decision, he took the matter to court and, after a long process, the Superior Court of Justice of the Valencian Community agreed with him in May 2018, recognizing his total permanent disability and condemning the entity to pay him the arrears with effect from August 1, 2013.
After collecting the money accumulated from those five years, the conflict with the Treasury arose. The woman defended that this money should be declared distributed in the years to which the pensions actually corresponded (2013, 2014, 2015…), since putting it all in the 2018 declaration caused double taxation and the personal income tax would skyrocket due to the progressivity of the tax. Even so, the Tax Agency (AEAT) required him to pay taxes all at once in 2018, applying the special rule of article 14.2.a) of the Personal Income Tax Law. After receiving the “no” from the economic-administrative court (TEAR) and the regional court, the case reached the Supreme Court.
The “disputed credits” rule
Despite the hard economic blow for the citizen, the Supreme Court has ruled in favor of the Treasury and has dismissed the appeal. The Chamber explains that, since the recognition of the pension itself was in judicial conflict, this money is considered a litigated credit. Therefore, the law is clear and requires the application of an exception to the general rule.
“When all or part of an income has not been paid, because the determination of the right to its collection or its amount is pending a judicial resolution, the unpaid amounts will be charged to the tax period in which it becomes final” reports the High Court in the ruling (STS 636/2026 of the Judiciary) that refers to article 14.2.a) of the tax law.
That is, it doesn’t matter what year the money is from; If you had to go to trial to get it, it is declared in full in the year in which the sentence can no longer be appealed. As a final doctrine, the court says that “they must be attributed to the year in which the ruling that recognized such a situation became final.”
In this ruling, we must know that, although this rule penalizes the taxpayer by collecting so much income at once, there is a mechanism to alleviate the burden. The Supreme Court points out that, to prevent this from being unfair due to the progressivity of personal income tax, a 30% reduction (provided for in article 18.2 LIRPF) must be applied to these arrears, as they are income generated in a period of more than two years. In fact, the ruling itself confirms that the Treasury had already correctly applied this 30% lifeline in the liquidation of the affected party.