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A taxpayer enquired whether the 40% reduction applicable to contributions made prior to 2007 could be applied to multiple partial lump-sum withdrawals in different years. The Directorate General for Taxes (DGT) ruled that, as these withdrawals arise from the same contingency, the reduction may only be applied to a single withdrawal.
This ruling limits the tax benefits available to pensioners who intend to make multiple partial lump-sum withdrawals from the same pension plan, as the preferential tax rate cannot be reused for subsequent withdrawals under the same contingency.
The tax team reviews your specific situation.
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