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V0334-24 7 March 2024 · SG de Tributación de las Operaciones Financieras Criterion in force
IRPF · entidades de previsión social voluntaria

40% reduction applicable to lump-sum payments from Voluntary Social Welfare Entities (EPSV)

The inquirer asks whether the 40% reduction under former regulations can be applied to lump-sum benefits from Voluntary Social Welfare Entities (EPSV). The Directorate-General for Taxes (DGT) confirms this is possible for the portion of contributions made up to 2006, provided all legal requirements and deadlines are met.

The question raised

Possibility of applying the 40 percent reduction provided for in the twelfth transitional provision of Law 35/2006 to benefits obtained from EPSV in the form of a lump sum.

The DGT's ruling

Benefits from pension plans and EPSV (Employee Share Ownership Plans) are considered earned income. If received as a lump sum, the 40% reduction may be applied to the portion of the benefit corresponding to contributions made until December 31, 2006. To this end, more than two years must have elapsed since the first contribution and they must be received within the timeframes set forth in the twelfth transitional provision. The reduction is applied independently to each plan or mutual fund.

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