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V1602-24 1 July 2024 · SG de Tributación de las Operaciones Financieras Criterion in force
IRPF · rendimientos del trabajo

The 40% reduction cannot be applied to more than one lump-sum withdrawal for the same contingency

A retiree with contributions made prior to 2007 enquired whether the 40% reduction could be applied to several partial lump-sum withdrawals. The Directorate General for Taxes (DGT) ruled that the reduction can only be applied once per contingency, although the taxpayer may choose which tax year to apply it in within the legal timeframe.

The question raised

Possibility of applying the 40 percent reduction provided for in the transitional regime to future pension plan withdrawals that may be made.

The DGT's ruling

Pension plan benefits are earned income. The 40% reduction for contributions made until 2006 can only be applied once to the benefit received as a lump sum for the same contingency. If several partial lump-sum withdrawals are made for the same contingency, the reduction is only applicable to one of them. The taxpayer may choose the tax year in which to apply said reduction, provided it is within the period established by the twelfth transitional provision of the Personal Income Tax Law.

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