6. Benefits for absolute permanent disability or major disability received from Social Security or by the entities that replace it
Regulations: Art. 7.f) Law Personal Income Tax
The exemption affects the benefits received from Social Security in its contributory modality .
Currently, in the absence of the regulatory development referred to in article 194 and the twenty-sixth transitional provision of the consolidated text of the General Social Security Law, approved by Royal Legislative Decree 8/2015, of October 30 ( BOE of October 31), permanent disability admits four gradations in the field of Social Security, configured as follows:
- Partial permanent disability for the usual profession: that which, without reaching the degree of totality, causes the worker a decrease of no less than 33 percent in his normal performance for said profession, without preventing him from carrying out the fundamental tasks of the same.
- Total permanent disability for the usual profession: which disqualifies the worker from carrying out all or the fundamental tasks of said habitual profession, as long as he can dedicate himself to a different one.
- Absolute permanent disability for all work: which completely disqualifies the worker from any profession or trade.
- Major disability: situation that affects the worker and produces the same effects as the absolute one, but that, in addition, as a consequence of anatomical or functional losses, the assistance of another person is needed for the most essential acts of life, such as dressing, moving, eating or analogues.
Of these graduations, only benefits for absolute permanent disability or major disability received from Social Security, give the right to exemption.
Regarding pensions coming from abroad received by taxpayers of Personal Income Tax and that must be subject to taxation in Spain, they will enjoy exemption, provided that the following requirements:
That the recognized degree of disability can be equated in its characteristics with absolute disability or great disability.
That the entity that pays the benefit enjoys, according to the regulations of the country of origin of the pension, the character of substitute for Social Security.
For the purposes of equalization or, where appropriate, homologation of benefits for permanent disability in their degrees of absolute or great disability, see the interpretative criteria established by the Supreme Court in Sentence number 346/2019, of March 14 (ROJ: STS 810/2019).
Additional Information: regarding the documents that AEAT collects from recipients of disability pensions from foreign States who claim the application of the exemption of article 7.f) of the law of IRPF are those indicated below:
- Resolution by which the benefit or income in question is recognized,
- Official medical report, descriptive of the pathologies, injuries, sequelae and functional limitations taken into consideration for the assessment of work disability, and
- Official expert opinion that specifies and determines the scope and impact of the functional limitations on work capacity.
Said documentation must be accompanied by its corresponding translation into Spanish.
Likewise, the benefits recognized to professionals not integrated into the special Social Security regime of self-employed or self-employed workers by the Social Security Mutual Funds that act as alternatives to the special Security regime are declared exempt. Social mentioned, provided that these are benefits in situations identical to those provided for absolute permanent disability or major disability under Social Security.
The exempt amount is limited to the amount of the maximum benefit recognized by Social Security for the corresponding concept . The excess will be taxed as income from work, understood to be produced, in the event of concurrent benefits from Social Security and the aforementioned mutual societies, in the provision of the latter.
Unlike the above, because they are not public benefits, benefits paid by any other entity or company are subject to and not exempt from personal income tax , even if they are perceived as a consequence of absolute permanent disability or great disability.