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V1897-19 19 July 2019 · SG de Tributación de las Operaciones Financieras Criterion in force
IRPF · contingencia de jubilación

Potential application of the 40% reduction on pension plans for early retirement

A taxpayer with contributions made prior to 2007 seeks to know whether they can apply the 40% reduction when collecting their pension plan due to long-term unemployment. The Directorate General of Taxes (DGT) clarifies that if the plan allows for early collection due to retirement, it is fiscally treated as a retirement contingency, allowing the reduction to be applied subject to certain time limits.

The question raised

Possibility of applying the 40 percent reduction.

The DGT's ruling

If the pension plan allows for early retirement collection due to termination of the employment relationship and unemployment, the contingency is considered to be retirement for tax purposes. In this case, the 40% reduction may be applied to the portion of the benefit paid as a lump sum corresponding to contributions made until December 31, 2006. To do so, more than two years must have elapsed since the first contribution and the payment must be received within the period established in the twelfth transitional provision of Law 35/2006. The reduction can only be applied once per tax period, regardless of the number of plans held by the taxpayer.

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