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V2061-17 1 August 2017 · SG de Tributación de las Operaciones Financieras Criterion in force
IRPF · rendimientos del trabajo

The 40% pension plan capital reduction can only be applied within a single tax period

A taxpayer inquired whether their daughters could apply the 40% reduction when receiving pension plan capital following their death. The Directorate General for Taxes (DGT) ruled that the reduction applies only to contributions made until 31 December 2006 and must be exercised within a single tax year.

The question raised

Whether his three daughters will be able to apply the 40 percent reduction to the capital they receive upon the death of the taxpayer and, if so, the deadline for applying the same.

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 more than two years have elapsed since the first contribution. This reduction can only be granted to amounts received within the same tax period. The period for applying this transitional regime ends on the second fiscal year following that of the death.

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