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V3033-23 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 leads to total disability

A pensioner receiving a Civil Service pension due to partial disability inquired whether their pension remains subject to Income Tax following a worsening of their condition that resulted in absolute disability. The Directorate-General for Taxes (DGT) ruled that the pension is exempt, provided the requirements for total disability are met.

The question raised

Whether the pension currently being received is subject to Personal Income Tax and, therefore, whether the corresponding withholding must be applied.

The DGT's ruling

Pensions from the Civil Service Pension Scheme due to invalidity or permanent disability are exempt if the injury or illness completely disables the recipient from any profession or trade. According to the TEAC criterion, this exemption applies whether the total disability occurs at the time of retirement or arises subsequently due to the worsening of the illness, provided it occurs before the compulsory retirement age. In this case, the worsening that determines absolute disability allows for the exemption under article 7.g) of the Personal Income Tax Law.

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