“Compensatory spousal support payments (…) made pursuant to a judicial decision may be deducted from the taxable base” (Section 55 of Law 35/2006, of November 28, on Personal Income Tax). This provision offers a tax benefit to the taxpayer making such compensatory payments, allowing them to reduce their taxable base in their personal income tax (IRPF) declaration. However, from what point can this reduction be applied? Is it only applicable once a judge has established the compensatory support through a Court ruling, or can it be applied from the moment payments begin, as agreed in a regulatory agreement awaiting judicial approval?

The Spanish Supreme Court’s Third Chamber addressed this issue in Ruling 1369/2024, of July 22. The case involved a taxpayer seeking to amend his 2014 IRPF tax, because he had not deducted the compensatory payments made to his ex-spouse from January to June of that year. These payments were made pursuant to a regulatory agreement signed in December 2013, which was not approved by a Court until July 2014. The tax authorities rejected this claim, maintaining that the deduction could only apply from the date of the divorce judgment, leading the matter to the Supreme Court.

The Supreme Court reiterated long-standing case law recognizing the validity and effectiveness of a regulatory agreement as a bilateral legal contract, signed and accepted by both parties, even before judicial approval. It further stated that the principle of party autonomy governing such agreements also covers the establishment of compensatory support. As for the tax implications of the regulatory agreement, the Court rejected a literal or restrictive interpretation of Section 55 of the Personal Income Tax Law, provided that, as in the case under review, the subsequent judicial approval does not alter the terms of the agreement.

As a result, the Court held that the reduction in the taxable base for compensatory payments made to an ex-spouse by judicial decision is applicable from the date the regulatory agreement establishing the payment was signed.