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V0468-24 19 March 2024 · SG de Tributación de las Operaciones Financieras Criterion in force
IRPF · rendimientos del trabajo

40% reduction on pension contributions made before 2007 applicable if redeemed before 2025

The inquirer seeks to know whether the 40% tax reduction can be applied when redeeming pension plan contributions made prior to 2007 as a lump sum. The Directorate General for Taxes (DGT) rules that this is possible provided the deadlines set out in the twelfth transitional provision are met and at least two years have elapsed since the initial contribution.

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. The 40% reduction may be applied to the portion of the benefit corresponding to contributions made until December 31, 2006, if received as a lump sum or combined with other payments. To qualify, more than two years must have elapsed since the first contribution and the payment must be received within the period established by the twelfth transitional provision of the LIRPF. In this case, as the contingency occurred in 2022, the period expires on December 31, 2024.

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