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V0904-19 26 April 2019 · SG de Tributación de las Operaciones Financieras Criterion in force
IRPF · contingencia de jubilación

Retirement contingency occurs upon termination of employment if early retirement benefits are received

A taxpayer sought clarification on when the contingency arises to apply a 40% reduction when redeeming a long-term unemployment pension plan. The Directorate General for Taxes (DGT) ruled that if early retirement benefits can be collected, the tax contingency occurs when the employment relationship is terminated and the individual enters a state of unemployment.

The question raised

The moment at which the contingency is understood to have occurred for the purposes of applying the 40 percent reduction.

The DGT's ruling

If the pension plan allows for early retirement collection, the tax contingency of retirement occurs at the moment the requirements for said collection are met, i.e., when the employment relationship is terminated and the individual enters a legal state of unemployment. In the event that a contingency and an exceptional liquidity event occur simultaneously, for tax purposes, it is understood that the benefit is received due to the occurrence of the contingency. The 40% reduction applies to the portion of the benefit in the form of capital corresponding to contributions made until December 31, 2006, complying with the terms of the twelfth transitional provision.

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