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V0843-16 3 March 2016 · SG de Tributación de las Operaciones Financieras Criterion in force
IRPF · rendimientos del trabajo

40% reduction possible on pension capital withdrawals

The taxpayer asks how pension withdrawals made before 2006 are taxed. The tax authority states that such withdrawals are considered income from work and may benefit from a 40% reduction under certain conditions.

The question raised

Taxation of the benefit depending on how said pension plan is redeemed.

The DGT's ruling

Pension plan benefits constitute earned income included in the general tax base. If received as a lump sum, a 40% reduction may be applied to the portion corresponding to contributions made until December 31, 2006, provided that more than two years have elapsed since the first contribution. This reduction may only be applied once per taxpayer in the same tax period, regardless of the number of plans held. Amounts received in different years may not benefit from this reduction.

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