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V1489-19 20 June 2019 · SG de Tributación de las Operaciones Financieras Criterion in force
IRPF · rendimientos del trabajo

40% reduction applicable to pension plan benefits received as a lump sum

A taxpayer inquired about the deadline for applying the 40% reduction to a pension plan following long-term unemployment. The DGT ruled that the reduction applies to the portion of contributions made up to 2006, provided the benefit is received as a lump sum and within the timeframes established by the twelfth transitional provision.

The question raised

1. Period for applying the 40 percent reduction to the amount received as a lump sum, for the portion corresponding to contributions made before 2007.

The DGT's ruling

Pension plan benefits are considered earned income. 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 two years have elapsed since the first contribution and it is received within the period established by the twelfth transitional provision. The reduction may only be granted once per tax year, regardless of the number of plans held by the taxpayer. In the event of early retirement collection, the contingency occurs when the requirements for early collection are met, such as the termination of the employment relationship due to an ERE (Collective Redundancy Procedure).

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