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V0794-19 15 April 2019 · SG de Tributación de las Operaciones Financieras Criterion in force
IRPF · rendimientos del trabajo

Loss of 40% pension plan tax reduction if not redeemed within the legal timeframe

The inquirer asks whether the 40% reduction can be applied to contributions made prior to 2007 if the plan is not redeemed upon retirement, or if beneficiaries could apply it in the event of death. The DGT rules that if redemption does not occur within the period specified in the twelfth transitional provision, the right to the reduction is lost.

The question raised

If one were to opt not to redeem the plan within the period to apply the 40 percent reduction, the tax consequences and the possibility of beneficiaries applying the aforementioned reduction to the benefit received as a consequence of the death of the consultant. Possibility of redeeming benefits corresponding to contributions made from January 1, 2007, onwards without losing the right to apply the reduction.

The DGT's ruling

The 40% reduction applies only to the portion of the benefit corresponding to contributions made until December 31, 2006, provided that it is received as a lump sum and within the period established by the twelfth transitional provision of the LIRPF. If the contingency occurs in 2019, the period for applying this final transitional regime ends on December 31, 2021. The reduction cannot be applied to amounts received in other fiscal years after the expiration of the period.

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