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V0392-19 25 February 2019 · SG de Tributación de las Operaciones Financieras Criterion in force
IRPF · entidades de previsión social voluntaria

Income tax reductions available for voluntary social welfare scheme contributions if mutual fund requirements are met

A worker residing in common territory has enquired whether they can benefit from tax incentives for voluntary contributions to a Voluntary Social Welfare Entity (EPSV) in the Basque Country. The Directorate General for Taxes (DGT) has ruled that while they cannot apply the tax benefits offered by the Provincial Councils due to their residency, they are entitled to the reductions provided under state regulations for social welfare mutual funds.

The question raised

The possibility for the taxpayer to benefit from tax incentives in the event of making voluntary contributions, even without being a resident in the Basque Country, and the maximum amounts for applying such incentives.

The DGT's ruling

Contributions to EPSV may reduce the general taxable base of the Personal Income Tax (IRPF) in common territory if they meet the requirements of Article 51.2 of the LIRPF. The maximum combined reduction limit is the lesser of these amounts: 30% of the sum of net income from employment and economic activities, or 8,000 euros annually. Contributions that cannot be reduced due to insufficient base or the percentage limit may be reduced in the following five tax years, without exceeding the maximum legal limits.

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