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V2847-14 20 October 2014 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · renta exenta

Swiss disability pension may be exempt from Spanish tax if conditions met

A resident in Spain asks whether their Swiss disability pension from the Swiss Compensation Fund is exempt from Spanish income tax. The DGT states that the pension is only subject to Spanish tax (except in cases of nationality or public origin) and may be exempt if the degree of disability and the nature of the entity are proven.

The question raised

Whether the pension received from Switzerland constitutes income exempt from taxation in Spain through the application of Article 7 f) of the Personal Income Tax Law.

The DGT's ruling

The disability pension may be exempt pursuant to Article 7.f) of the Personal Income Tax Law (LIRPF) if two requirements are met: that the recognized degree of incapacity is equivalent to absolute incapacity or severe disability, and that the paying entity is a substitute for the Social Security under Swiss regulations. The taxpayer must substantiate these points before the Administration. If the pension were paid by the Swiss State or its public entities to a Swiss national, the taxing power could lie with Switzerland according to the Convention.

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