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V0531-17 2 March 2017 · SG de Tributación de las Operaciones Financieras Criterion in force
IRPF · rendimientos del trabajo

40% reduction applicable to pension plan withdrawals under certain requirements

A query was raised regarding whether a 40% reduction can be applied when withdrawing pension plans and if a 25% exemption exists for contributions made prior to 1998. The DGT clarifies that the 40% reduction is possible under specific conditions, but the 25% exemption does not exist.

The question raised

Application of the 40 percent reduction. Whether a 25 percent exemption exists for contributions made until December 31, 1998.

The DGT's ruling

Pension plan benefits are considered earned income. The 40% reduction applies to the portion of the benefit corresponding to contributions made until December 31, 2006, provided that it is received as a lump sum or mixed payment, the two-year period from the first contribution has elapsed, and it is received within the timeframes established by the twelfth transitional provision. This reduction may only be applied once per tax period, regardless of the number of plans held by the taxpayer. There is no 25% exemption for contributions made until December 31, 1998.

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