Back to index
V1615-23 7 June 2023 · SG de Tributación de las Operaciones Financieras Criterion in force
IRPF · contingencia de jubilación

Retirement contingency for the 40% reduction is deemed to occur upon total retirement if no prior payments were made

The inquirer asks whether they can withdraw contributions made before 2007 by applying the 40% reduction if the retirement contingency occurs at a later date. The Directorate General for Taxes (DGT) responds that, for tax purposes, the retirement contingency is deemed to occur at the time of retirement; however, if payments are not initiated until total retirement, the latter marks the occurrence of the contingency.

The question raised

Occurrence of the retirement contingency for the purposes of applying the 40 percent reduction provided for in the transitional provision. Possibility of redeeming benefits corresponding to contributions made before January 1, 2007, without losing the right to apply the reduction.

The DGT's ruling

Pension plan benefits constitute earned income. The 40% reduction is applicable to the portion of the benefit corresponding to contributions made until December 31, 2006, provided that it is received as a lump sum and within the timeframes established by the twelfth transitional provision of the LIRPF. If the collection of the retirement benefit is not initiated prior to the onset of total retirement, the retirement contingency is deemed to have occurred on the date of total retirement.

Book your free first meeting