Taxation of permanent disability pensions and birth benefits

There is a recurring doubt regarding the application of tax exemptions when different types of economic benefits coincide. Recently, the Dirección General de Tributos (DGT) has issued a ruling on the coexistence of a permanent disability pension and the benefit for the birth and care of a child.

What the DGT has ruled

The taxpayer inquired whether the permanent disability pension they received would be exempt from Personal Income Tax (IRPF) during the 16 weeks in which they also received the benefit for the birth and care of a child, given that the latter enjoys an exemption treatment. The DGT has determined that the answer is negative.

The ruling establishes that the exemption provided for in the regulations for the benefit for the birth and care of a child is specific to said benefit. The fact that both concepts are received simultaneously during the same period of time does not alter the nature of the permanent disability pension. Therefore, the pension maintains its status as income from work or economic activity, subject to the regulations of the Personal Income Tax Law (LIRPF).

What this means for you

If you are a beneficiary of a permanent disability pension and, simultaneously, receive the benefit for the birth and care of a child, you must take into account that:

• The birth benefit is the only one that enjoys the aforementioned tax exemption.
• The permanent disability pension remains taxable income in your tax return.
• It is not possible to apply the exemption of one benefit to the other merely because they coincide in time.

What you should do

It is fundamental to maintain precise tracking of all income received during the tax year. Since the regulations of the IRPF Law and the Revised Text of the General Social Security Law (TRLGSS) strictly define exemptions, it is recommended to assess each particular situation to ensure that the tax return correctly reflects the nature of each income and to avoid possible requests from the Tax Administration.