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The taxpayer inquired about the timeframe for applying the 40% reduction to pension plan benefits for contributions made up to 2006. The Directorate General for Taxes (DGT) ruled that this reduction may only be applied to lump-sum payments received within the same tax period, at the taxpayer's discretion.
This ruling clarifies that taxpayers cannot spread the 40% tax reduction for pre-2007 contributions across multiple tax years; it must be applied entirely to the capital received in one single tax year.
The tax team reviews your specific situation.
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