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V2455-20 16 July 2020 · SG de Tributación de las Operaciones Financieras Criterion in force
IRPF · rendimientos del trabajo

Potential application of the 40% reduction on pension plan consolidated rights paid as a lump sum

A query was raised regarding the application of the 40% reduction when receiving consolidated rights from pension plans under Royal Decree-Law 11/2020. The Directorate General for Taxes (DGT) clarifies that this reduction applies to the portion of contributions made up to 2006, provided the payment is received as a lump sum and within the legal timeframes.

The question raised

Several issues are raised regarding the application of the transitional regime provided for in the twelfth transitional provision of Law 35/2006, of November 28, on Personal Income Tax; issues which are described in the response.

The DGT's ruling

Amounts received for consolidated rights are considered earned income from employment. If received as a lump sum, the 40% reduction may be applied to the portion corresponding to contributions made until December 31, 2006, provided that the terms of the twelfth transitional provision are met. This reduction may only be granted once per tax period, regardless of the number of pension plans held by the taxpayer. If retirement benefits are received simultaneously, it is understood that the retirement benefit is being received, preventing a second application of the reduction.

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