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V3034-15 9 October 2015 · SG de Tributación de las Operaciones Financieras Criterion in force
IRPF · rendimientos del trabajo

40% reduction possible on pension capital withdrawals prior to 2007

The consultant asks whether a 40% reduction can be applied to contributions made to a pension plan before 2007. The DGT states that pension withdrawals are considered earnings from work and that the reduction may apply if received as capital under the transitional regime.

The question raised

Possibility of redeeming the pension plan. Possibility of applying the 40 percent reduction to the amount received corresponding to the contributions made until December 31, 2006.

The DGT's ruling

Pension plan benefits are earned income that forms part of the general taxable base of the recipient's Personal Income Tax (IRPF). If the benefits are received as a lump sum, a 40% reduction could be applied, pursuant to the twelfth transitional provision of Law 35/2006, for the portion of contributions made until December 31, 2006. Once said reduction has been applied in one year, the remaining amounts received in other tax years shall be taxed without it.

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