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V1169-18 8 May 2018 · SG de Tributación de las Operaciones Financieras Criterion in force
IRPF · entidades de previsión social voluntaria

40% reduction applicable to lump-sum withdrawals from EPSV for contributions made prior to 2007

A resident in common territory has enquired about the tax treatment and potential reductions when withdrawing an individual social welfare plan (EPSV) as a lump sum. The Directorate General for Taxes (DGT) has ruled that such benefits are classified as employment income and that the 40% reduction can be applied to the portion corresponding to contributions made up to 31 December 2006.

The question raised

Tax treatment of said redemption. Possibility of applying any reduction.

The DGT's ruling

Benefits from EPSV (Employee Share Ownership Plans) are considered earned income and are included in the general tax base. If the redemption is made as a lump sum, the 40% reduction may be applied to the portion of the benefit corresponding to contributions made until December 31, 2006, provided that more than two years have elapsed since the first contribution. This reduction can only be applied to amounts received as a lump sum within the same tax period, at the taxpayer's discretion. For contingencies occurring in 2010 or earlier, the transitional regime is only applicable to benefits received until December 31, 2018.

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