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V0602-14 6 March 2014 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · renta exenta

Swiss disability pension may be exempt in Spain if specific conditions met

A resident in Spain asks whether their Swiss disability pension paid by the Swiss Compensation Fund is exempt from Spanish personal income tax. The DGT states that the pension may be exempt if it corresponds to absolute incapacity or severe disability and the entity acts as a substitute for Social Security.

The question raised

Whether the pension received from Switzerland constitutes income exempt from taxation in Spain under the Personal Income Tax.

The DGT's ruling

For the Swiss pension to be exempt pursuant to Article 7.f) of the LIRPF, two requirements must be met: that the degree of disability is equivalent to absolute disability or severe invalidity, and that the paying entity is a substitute for the Social Security under Swiss regulations. If the pension were paid by the Swiss State or its public bodies to a Swiss national for services rendered, the taxing power could lie with Switzerland according to the Double Taxation Convention.

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