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V2032-20 19 June 2020 · SG de Tributación de las Operaciones Financieras Criterion in force
IRPF · rendimientos del trabajo

40% reduction applicable to pension plan benefits from contributions made prior to 2007

A taxpayer inquired whether the 40% reduction could be applied to pension plan benefits derived from contributions made before 2007, following retirement in 2019. The Directorate General for Taxes (DGT) ruled that this is possible, provided the time limits and formal requirements set out in the twelfth transitional provision are met.

The question raised

Possibility of applying the 40 percent reduction.

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 they are received within the legal timeframe. This benefit can only be applied to amounts received as a lump sum within the same tax period, regardless of the number of plans held by the taxpayer.

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