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V1666-19 5 July 2019 · SG de Tributación de las Operaciones Financieras Criterion in force
IRPF · rendimientos del trabajo

Pension plan benefits are fully taxed as employment income

A taxpayer inquired whether they could be taxed only on the gains from their pension plan, given that they did not claim tax relief on contributions at the time. The Directorate General for Taxes (DGT) ruled that benefits are fully integrated into the taxable base as employment income, regardless of whether the contributions were subject to tax reductions.

The question raised

Possibility of being taxed solely on the benefits obtained and not on the contributed capital.

The DGT's ruling

Pension plan benefits are considered earned income and must be included in the general part of the Personal Income Tax (IRPF) taxable base. It is not possible to reduce the income received by the amounts of the contributions made. However, if the contingency occurs in 2019, the 40% reduction could be applied to the portion corresponding to contributions made until 2006, provided that it is received within the period established by the twelfth transitional provision.

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