Among the main characteristics of pension plans is their particular taxation, not only because of the possibility of applying Reductions in personal income tax for contributions made during the life of the plan, reductions that have progressively decreased, with the maximum limit being € 8.000 until 2020, € 2.000 in 2.021 and from the year 2022 on € 1.500 per year, but also due to the different situations that arise when the capital of the plan is rescued .
At the time of redemption, the consolidated amounts can be withdrawn, either in the form of capital or in the form of income. These amounts, at all times, will be considered work income, being included in the Personal Income Tax of the contributor or, in the event of his death, in the personal income tax of his awardees, not paying tax at any time in the Tax on Successions and Donations.
Currently a transitional regime allows apply a 40% reduction in the capital recovered for the part of it that corresponds to premiums paid prior to December 31, 2006, provided that the rescue occurs in the form of capital, and within the term stipulated by law, which is currently two years from the contingency.
If we refer to the legal text, the only requirements established in Personal Income Tax Law to enjoy this temporary reduction are:
- That the benefit is obtained in the form of capital
- That the amounts received correspond to premiums paid more than two years from the first contribution
- The reduction will only be applied to the part corresponding to the contributions that were made up to December 31, 2006
- The limit provided by law with respect to the year in which the contingency occurs, that is, in the same year, or in the following two years must be respected.
So far, the General Directorate of Taxes, in recent binding consultations (V1963-21, V1966-21, V1967-21), insisted that it is only possible to apply the reduction of 40% in a single tax period, not being possible to apply said benefit if it was already used in a period prior tax for the same circumstance.
However, the TEAR of the Valencian Community In a Resolution of April 29, 2021, a new criterion has been set, opposite to the one maintained by the DGT. The TEARCV does admit the reduction applied in different years and by different plans, based on the wording of the regulations set out above.
The TEARCV resolves that, if it had been the legislator's will to introduce some other quantitative limit, it would have done so, but through the 2015 reform that modified the Personal Income Tax Law, only a temporary limit was added to be able to apply the transitional regime, depending on the year in which the contingency occurred.
Therefore, since no additional limit is regulated, it is possible to apply the corresponding reduction to the capital benefits from two different pension plans in different years. In other words, if a participant has two pension plans for which he has paid premiums before December 31, 2006, he will be able to redeem them in different years and enjoy a 40% reduction in both years.
Despite the fact that the Tax Agency may file an appeal for the unification of criteria, the resolution opens an interesting avenue of challenge for beneficiaries of pension plan benefits.
Joaquin Casanova Cuenca
Tomarial Tax Area
For any questions on this matter, contact Tomarial and we will analyze your particular case.
