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V5019-16 18 November 2016 · SG de Tributación de las Operaciones Financieras Criterion in force
IRPF · rendimientos del trabajo

The 40% reduction for contributions made before 2007 can only be applied in a single tax year

A taxpayer inquired whether the 40% reduction could be applied to pension plan amounts received across two different tax years due to unemployment. The Directorate General of Taxes (DGT) ruled that the reduction may only be applied to amounts received within the same tax period.

The question raised

Possibility of applying the 40 percent reduction to the amounts received in the two fiscal years, for the portion corresponding to contributions made before 2007.

The DGT's ruling

Pension plan benefits are considered earned income. If received as a lump sum, a 40% reduction may be applied to the portion corresponding to contributions made until December 31, 2006. However, this reduction can only be granted to amounts received within the same tax period, at the taxpayer's discretion. Amounts received in other years shall be taxed in full without said reduction.

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