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V3113-21 14 December 2021 · SG de Tributación de las Operaciones Financieras Criterion in force
IRPF · plan de pensiones

Pension plan benefits upon death are taxed as employment income under Personal Income Tax

A query was raised regarding which tax applies to pension plan benefits following the death of a participant and when they should be taxed. The Directorate General for Taxes (DGT) clarifies that they are subject to Personal Income Tax (IRPF) and that the tax liability arises when the benefit becomes due.

The question raised

1. Tax applicable to the death benefit.

The DGT's ruling

Pension plan benefits, including the contingency of death, are taxed under Personal Income Tax (IRPF) as income from employment and are not subject to Inheritance and Gift Tax. The moment of imputation to the tax period is when the benefit becomes due to the recipient. For contingencies occurring in 2015, the deadline to apply the 40% reduction under the transitional regime ended on December 31, 2017.

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