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V0095-14 16 January 2014 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · renta exenta

Swiss disability pension may be exempt from Spanish IRPF

A Spanish resident asks whether their Swiss disability pension paid by the Swiss Compensation Fund is exempt from Spanish income tax. The DGT responds that exemption depends on the fund acting as a substitute for Social Security and the disability level being equivalent to absolute or great disability.

The question raised

Whether the pension received from Switzerland constitutes income exempt from taxation in Spain under the Personal Income Tax.

The DGT's ruling

The pension may benefit from the exemption provided in Article 7.f) of the Personal Income Tax Law (LIRPF) if two requirements are met: that the degree of disability is equivalent to absolute disability or severe invalidity and that the paying entity is a substitute for the Social Security under Swiss regulations. These requirements must be proven to the Administration. However, if the pension is paid by the Swiss State or its public entities to a Swiss national for services rendered, it would only be taxable in Switzerland pursuant to Article 19 of the Convention.

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