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V0039-14 14 January 2014 · SG de Tributación de las Operaciones Financieras Criterion in force
IRPF · rendimientos del trabajo

The 40% pension plan reduction can only be applied once per year for lump-sum payments

The taxpayer inquired whether the 40% reduction could be applied to benefits from different pension plans received in different years. The Directorate General for Taxes (DGT) ruled that the reduction may only be applied to lump-sum amounts received within the same tax period, at the taxpayer's discretion.

The question raised

Possibility of receiving benefits in the indicated order. Right to apply the 40 percent reduction to the benefit received in 2017.

The DGT's ruling

Pension plan benefits are considered earned income. The 40% reduction applies to the portion of the benefit received as a lump sum corresponding to contributions made until December 31, 2006, provided that more than two years have elapsed since the first contribution. This reduction may only be granted to amounts received as a lump sum within the same tax period, and therefore may only be applied once in a single year. Amounts received in other years shall be taxed without said reduction.

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