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V0901-21 14 April 2021 · SG de Tributación de las Operaciones Financieras Criterion in force
IRPF · rendimientos del trabajo

40% pension plan reduction applicable if lump sum is received within legal timeframes

A beneficiary of a pension plan following a death inquired whether the 40% reduction for contributions made prior to 2007 could be applied. The Directorate General of Taxes (DGT) ruled that this is possible, provided the benefit is collected as a lump sum within the timeframes established by the twelfth transitional provision and within a single tax period.

The question raised

Possibility of applying the 40 percent reduction provided for in the transitional regime. Temporal imputation of the benefit received as a beneficiary of the pension plan.

The DGT's ruling

Pension plan benefits are considered earned income. The 40% reduction may be applied to the portion of the benefit corresponding to contributions made until December 31, 2006, provided it is received as a lump sum and within the timeframes established by the twelfth transitional provision. This reduction may only be applied once within the same tax period, regardless of the number of plans held by the taxpayer. Temporal imputation is determined by the moment the benefit becomes due, according to the date of receipt and the payment terms set forth in the Pension Plans and Funds Regulations.

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