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V3031-23 21 November 2023 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · clases pasivas

Civil Service pensions are exempt from Income Tax if worsening illness causes total disability

A taxpayer inquired whether their Civil Service pension, increased following a worsening of their illness, is subject to Income Tax. The Directorate General for Taxes (DGT) ruled that the pension is exempt provided the injury or illness renders the recipient completely unable to perform any profession or trade.

The question raised

Whether the pension currently being received is subject to Personal Income Tax (IRPF).

The DGT's ruling

Passive Class pensions for permanent disability are exempt income pursuant to Article 7.g) of the Personal Income Tax Law (LIRPF) if the injury or illness completely disables the recipient from any profession or trade. According to the TEAC criterion, this exemption applies whether the disability exists at the time of retirement or occurs subsequently due to the worsening of the illness, provided it occurs before the age of compulsory retirement.

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