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V1188-24 23 May 2024 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · clases pasivas

Civil Service pensions are exempt from Income Tax if worsening illness causes total incapacity

A Civil Guard member inquired whether their pension for unfitness for service should be subject to Income Tax following a worsening of their illness that resulted in absolute incapacity. The Directorate General for Taxes (DGT) ruled that the pension is exempt from taxation as it meets the requirements for exemption due to permanent incapacity.

The question raised

Whether the pension currently being received is subject to Personal Income Tax (IRPF), and therefore, whether the corresponding withholding must be applied.

The DGT's ruling

Pensions under the Passive Classes Regime are exempt from Personal Income Tax (IRPF) if the injury or illness completely disables the recipient from any profession or trade. This exemption applies whether the disability occurs at the time of retirement or arises subsequently, prior to the compulsory retirement age, due to an aggravation of the illness. In this case, the aggravation that determines absolute incapacity and severe invalidity allows for the exemption pursuant to Article 7.g) of the Personal Income Tax Law (LIRPF).

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