Skip to content
Back to index
V0449-22 8 March 2022 · SG de Tributación de las Operaciones Financieras Criterion in force
IRPF · rendimientos del trabajo

40% reduction on pension plan benefits applicable if deadlines and requirements are met

A taxpayer inquired whether the 40% reduction could be applied to benefits from their occupational pension plan. The Directorate-General for Taxes (DGT) clarified that this is possible for the portion of contributions made up to 2006, provided the benefits are received within the legal timeframes and comply with the requirements of the transitional regulations.

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. If received as a lump sum, a 40% reduction may be applied to the portion corresponding to contributions made until December 31, 2006. This reduction requires that two years have elapsed since the first contribution and that the receipt occurs within the timeframes established in the twelfth transitional provision of the LIRPF. The application of this reduction due to retirement is not affected by having previously applied the reduction due to a contingency of disability.

Book your free first meeting