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V0223-21 10 February 2021 · SG de Tributación de las Operaciones Financieras Criterion in force
IRPF · rendimientos del trabajo

40% pension plan reduction applicable if benefits are received within the legal timeframe

A taxpayer with contributions made prior to 2007 and who retired in 2019 has enquired whether the 40% reduction can be applied. The DGT clarifies that the reduction is available for the portion of contributions made up to 2006, provided the benefit is received as a lump sum within the established timeframes.

The question raised

Possibility of applying the 40 percent reduction provided for in the transitional regime.

The DGT's ruling

Pension plan benefits are considered earned income. The 40% reduction may be applied to the portion of the benefit corresponding to contributions made until December 31, 2006, provided that it is received as a lump sum and within the period established by the twelfth transitional provision. For contingencies occurring in 2019, the transitional regime may only be applied to benefits received until the end of the 2021 fiscal year.

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