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V2759-14 14 October 2014 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · renta mundial

Swiss disability pension may be exempt from Spanish IRPF under specific conditions

A resident in Spain asks whether their Swiss disability pension is exempt from Spanish personal income tax. The DGT states that, under the double taxation treaty, Spain generally has tax jurisdiction, but exemption depends on whether the benefit qualifies as absolute incapacity or severe disability and whether the paying entity replaces Spanish Social Security.

The question raised

Whether the pension received from Switzerland constitutes income exempt from taxation in Spain under the Personal Income Tax.

The DGT's ruling

For the Swiss pension to be exempt under Article 7.f) of the LIRPF, two requirements must be met: that the recognized degree of disability is equivalent to absolute disability or severe invalidity, and that the entity paying the benefit is a substitute for Social Security according to Swiss regulations. If the pension is paid by the Swiss State or its public entities to a Swiss national for services rendered, the taxing power could lie with Switzerland pursuant to Article 19 of the Convention.

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