Skip to content
Back to index
V2297-17 11 September 2017 · SG de Tributación de las Operaciones Financieras Criterion in force
IRPF · rendimientos del trabajo

Reduction for lump-sum redemption may apply to collective insurance contributions made up to 2006

A worker retiring in 2018 inquired whether the reduction for lump-sum redemption could be applied to a collective insurance policy with contributions made prior to 2006. The Directorate-General for Taxes (DGT) ruled that this reduction is applicable to the portion of the benefit received as a lump sum, provided the requirements of the transitional regime are met.

The question raised

Application of the 40 percent reduction.

The DGT's ruling

Benefits from collective insurance policies that establish pension commitments are considered earned income. For insurance policies contracted before January 2006, the 2006 tax regime may be applied to the portion of the benefit corresponding to premiums paid up to December 31, 2006. If the benefit is received in a mixed form, the 40% or 75% reduction applies to the portion received as a lump sum. For contingencies in 2018, this transitional regime is only applicable to benefits received until the end of 2020.

Book your free first meeting