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V2384-24 20 November 2024 · SG de Tributación de las Operaciones Financieras Criterion in force
IRPF · contingencia de jubilación

The 40% reduction for contributions made before 2007 can only be applied once per retirement contingency

A taxpayer inquired whether the 40% reduction could be applied to two separate withdrawals: one due to long-term unemployment in 2024 and another due to retirement. The Directorate General of Taxes (DGT) ruled that if retirement benefits are collected early, it is fiscally classified as a retirement contingency, meaning the reduction can only be applied to a single withdrawal from that specific plan.

The question raised

1. Possibility of applying the 40 percent reduction provided for in the transitional regime of the Personal Income Tax to a partial withdrawal from an occupational pension plan due to the contingency of long-term unemployment carried out in 2024 and, subsequently, to another partial withdrawal due to the retirement contingency.

The DGT's ruling

If the early retirement benefit is received, for tax purposes, the retirement contingency is deemed to occur when the requirements for early collection are met. The 40% reduction for contributions made prior to 2007 can only be applied once to benefits derived from the same contingency. If the reduction is applied to an initial partial lump-sum withdrawal, it cannot be applied again to subsequent withdrawals from the same plan for the same contingency. The period for applying said reduction depends on when the contingency occurs.

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