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V3246-17 18 December 2017 · SG de Tributación de las Operaciones Financieras Criterion in force
IRPF · rendimientos del trabajo

Potential application of the 40% reduction to pension plan benefits for contributions made prior to 2007

The taxpayer enquires whether the 40% reduction can be applied to pension plan benefits derived from contributions made before 2007. The Directorate General for Taxes (DGT) confirms this is possible, provided that the receipt deadlines and the requirements of the transitional regulations are met.

The question raised

1. Possibility of applying the 40 percent reduction to the amount received corresponding to contributions prior to 2007.

The DGT's ruling

Pension plan benefits are considered earned income. If received as a lump sum or a mixed payment, the 40% reduction may be applied to the portion corresponding to contributions made until December 31, 2006. To this end, more than two years must have elapsed since the first contribution, and the benefit must be received within the timeframes established in the twelfth transitional provision of Law 35/2006. The retirement contingency is understood to have occurred upon accessing total retirement, unless the collection of the partial retirement benefit begins, in which case the contingency occurs at that moment.

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