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V0702-24 16 April 2024 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · clases pasivas

Civil service pensions are exempt from Income Tax if permanent total disability is recognised after retirement

A civil service pensioner enquired whether their new pension for permanent total disability and the supplementary pension for absolute incapacity should be subject to Income Tax. The Directorate-General for Taxes (DGT) ruled that, as the worsening of the illness occurred before the compulsory retirement age, the pension is exempt.

The question raised

Whether the pension currently being received is subject to IRPF taxation, and therefore, whether the corresponding withholding must be applied.

The DGT's ruling

Passive class pensions for invalidity or permanent disability are exempt if the injury completely disables the recipient from any profession or trade. According to the TEAC criterion, this exemption applies whether the disability exists at the time of retirement or occurs subsequently due to the worsening of the illness, provided it occurs before the compulsory retirement age. In this case, as total invalidity and absolute incapacity are recognized after retirement, the requirements of article 7.g) of the LIRPF are met.

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