Benefits received in the form of capital derived from other private social security systems (pension plans, social security mutual societies and insured pension plans)

Regulations: transitional provision twelfth Personal Income Tax Law

Beneficiaries of benefits derived from contingencies that occurred after January 1, 2011, can apply the reduction regime in force on December 31, 2006 but only to the part of the benefit corresponding to the contributions made up to that date (December 31 2006)

This regime consisted of the Personal Income Tax possibility of applying the following reductions:

1. 40 percent reduction in the following assumptions:

   • When more than two years have passed since the first contribution.
   • When they correspond to disability benefits, regardless of the period of time that has elapsed since the first contribution.
2. 50 percent reduction for benefits received in the form of capital by people with disabilities from social security systems established in their favor, provided that more than two years have passed since the first contribution .

Precisions

• The reduction applicable to benefits in the form of capital derived from pension plans or insured pension plans refers to all pension plans and insured pension plans subscribed by the same participant and in respect of the same contingency . Thus, regardless of the number of pension plans held by a taxpayer, the possible application of the aforementioned 40 or 50 percent reduction may only be granted to the amounts received in the form of capital in the same tax period. and for the part that corresponds to the contributions made until December 31, 2006. The rest of the amounts received in other years, even when received in the form of capital, will be taxed in their entirety without application of the reduction.

  However, in the event of receiving benefits derived from a pension plan and a social security mutual fund in the form of capital for the same contingency , the application of the reduction will refer to the provision of the pension plan and that of the social security mutual insurance company independently.

• In the case of retirement or disability benefits received from social security mutual societies, the reduction percentage is applied to the part of the full amount received corresponding to contributions made until December 31, 2006 (for benefits derived from contingencies that occurred after January 1, 2011), except in those cases in which the full performance of the work is determined by the difference between the amount received and the contributions that could not be subject to reduction or reduction in the tax base of Personal Income Tax .
• If pension plan benefits are received in a mixed form (income and capital), the beneficiary may freely identify or decide that part of the benefit received in the form of capital corresponds to contributions made prior to December 31, 2006, with inclusion of its profitability, of the part of the benefit that corresponds to contributions made after this date.

Note: As of January 1, 2015, the application of the reductions of the transitional regime is limited to benefits in the form of capital that are received within the deadlines indicated in the following section.