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V0462-17 21 February 2017 · SG de Tributación de las Operaciones Financieras Criterion in force
IRPF · rendimientos del trabajo

40% reduction applicable to pension plan lump-sum withdrawals if time limits and requirements are met

A retiree who previously withdrew a pension plan in 2016 without a reduction asks whether they can apply the 40% reduction when withdrawing another plan in capital form in 2017, provided the contributions were made prior to 2007. The Directorate General of Taxes (DGT) rules that the reduction is applicable to the portion of contributions made up to 31 December 2006, provided that the receipt deadlines and the required time intervals between contributions are satisfied.

The question raised

Application of the 40 percent reduction.

The DGT's ruling

Pension plan benefits are considered income from employment. If received as a lump sum or a mixed payment, the 40% reduction may be applied to the portion corresponding to contributions made until December 31, 2006. This reduction may only be applied once per taxpayer within the same tax period, at the taxpayer's discretion. For contingencies occurring in 2016, the benefit must be received before the end of the 2018 tax year to be eligible for the transitional regime.

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