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V0235-21 10 February 2021 · SG de Tributación de las Operaciones Financieras Criterion in force
IRPF · plan de pensiones

Deadline for applying the 40% reduction for pre-2007 contributions may have expired

A pension scheme participant with contributions made prior to 2007 enquired whether they could apply the 40% tax reduction when redeeming their plan due to early retirement following a collective redundancy. The Directorate-General for Taxes (DGT) ruled that, as the contingency arose from early collection following the redundancy, the period for applying this transitional regime has already expired.

The question raised

Possibility of applying the 40 percent reduction.

The DGT's ruling

Pension plan benefits are considered earned income. The 40% reduction for contributions made until 2006 is only applicable if the benefit is received within the timeframes set forth in the twelfth transitional provision. If retirement is claimed early due to collective dismissal, the contingency occurs at that moment. In this case, the period for applying the reduction expired on December 31, 2018.

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