a) Benefits derived from social security systems
Among the benefits derived from social security systems that are considered work income are the following:
• Social Security and Passive Classes
Pensions and passive assets received from public Social Security schemes and passive classes are income from work, regardless of the person who has generated the right to receive them. Likewise, other public benefits for situations of disability, retirement, accident, illness, widowhood, or similar constitute income from work.
However, benefits received for absolute permanent disability or severe disability, pensions for uselessness or permanent disability of the passive class regime are declared exempt from Personal Income Tax , provided that the injury or illness disables the employee. recipient in full for any profession or trade, as well as the family benefits referred to in letter h) of article 7 of the Personal Income Tax Law .
Attention: Please note that the Minimum Living Income constitutes a non-contributory Social Security benefit in accordance with the provisions of article 2.2 of the Law 19/2021, of December 20, that regulates it. Therefore, it will be considered performance of work in the part that exceeds the exemption provided for in article 7.y) of the Personal Income Tax Law .
Law 19/2021, of December 20, which establishes the minimum vital income, replaces, with effect from January 1, 2022, Royal Decree-Law 20/2020, of May 29.
• General mandatory mutual funds for civil servants ( MUFACE , MUGEJU , ISFAS ), orphan schools and other entities Similar
The benefits received by the beneficiaries of the aforementioned mutual societies, orphan schools and other similar entities constitute income from work.
• Pension plans
Work income is the benefits received by the beneficiaries of the pension plans and those received from the pension plans regulated in Directive (EU) 2016/2341 of the European Parliament and of the Council, of December 14, 2016, relating to the activities and supervision of employment pension funds, whatever the contingency covered by them.
In the case of pension plans, the contingencies for which the benefits are satisfied are those provided for in article 8.6 of the consolidated text of the Law regulating Pension Plans and Funds, approved by Royal Legislative Decree 1/2002, of November 29.
These contingencies are:
To determine the retirement contingency, the provisions of the corresponding Social Security Regime will be followed.
When a participant's access to retirement is not possible, the contingency will be understood to occur after reaching 65 years of age, at the moment in which the participant does not exercise or has ceased in the work or professional activity, and not is contributing for the retirement contingency for any Social Security Regime. However, the receipt of the corresponding benefit may be anticipated from the age of 60, in the terms established by regulation.
Furthermore, pension plans may provide for the payment of the retirement benefit in the event that the participant, regardless of his or her age, terminates his or her employment relationship and becomes legally unemployed in the following cases:
- Due to death, retirement or disability of the employer or due to termination of the legal personality of the contracting party (article 49.1.g) of the Consolidated Text of the Workers' Statute Law).
- Collective dismissal (article 51 of the Consolidated Text of the Workers' Statute Law).
- Termination of the contract for objective reasons (article 52 of the Consolidated Text of the Workers' Statute Law).
- In case of competition (article 57 of the Consolidated Text of the Workers' Statute Law).
Total and permanent work incapacity for the usual profession or absolute and permanent for all work, and major disability , determined in accordance with the corresponding Social Security Regime.
Death of the participant or beneficiary, which may generate the right to benefits for widowhood, orphanhood or in favor of other heirs or designated persons .
Severe dependency or great dependency of the participant , regulated in the Law for the promotion of personal autonomy and care for people in a situation of dependency.
Their consideration as work income is maintained, regardless of the form of collection of said benefit: income, capital or in mixed form, income and capital.
The amounts received from the disposition of the consolidated rights of pension plans in the exceptional cases referred to in article 8.8 of the consolidated text of the Law on the Regulation of Pension Plans and Funds are also considered work income. (in cases of serious illness or long-term unemployment). These amounts will have the same tax treatment as pension plan benefits.
Please note that those affected by the volcanic eruption on the island of La Palma have been allowed, exceptionally and exclusively during the period between October 6, 2021 and July 5, 2022, to dispose of their economic rights in certain cases and setting a maximum disposal amount. See in this regard in Chapter 13 of this manual the “Advance provision of consolidated rights” within “Reductions for contributions and contributions to social security systems” .
• Social security mutual societies
Income from work is the benefits received by the beneficiaries of insurance contracts concluded with social security mutual societies, regardless of the contingency covered by them (retirement, disability, death, severe dependency or great dependency and unemployment for working partners). , whose contributions may have been, at least in part, a deductible expense for determining the net income of economic activities (the mutual insurance company, in this case, acting as an alternative system to the special Social Security regime for self-employed or self-employed workers ) or object of reduction in the tax base of Personal Income Tax (the mutual insurance company, in this case, acting as complementary to the mandatory Social Security system).
Social security mutual societies are insurance entities that exercise a voluntary insurance modality complementary to the mandatory Social Security system, whose legal regulation is found in articles 43 et seq. of Law 20/2015, of July 14, on organization, supervision and solvency of insurance and reinsurance entities (BOE of July 15). The name of these entities must necessarily include the indication of "Social Welfare Mutuality". Due to their special fiscal relevance, among others, the professional mutual societies established by professional associations and the mutual societies that act as an instrument of corporate social security in favor of workers can be highlighted. See also the ninth Additional Provision of the Personal Income Tax Law .
The integration into the tax base of the benefits received from Social Security Mutual Funds must be carried out, depending on the nature of the contingency covered, in accordance with the following criteria:
Retirement or disability benefits
These benefits are integrated into the recipient's tax base, as income from work, exclusively to the extent that their amount exceeds the contributions that have not been subject to reduction or reduction in the tax base for failing to comply with any of the subjective legal requirements. provided for this purpose.
Therefore, the contributions redeemed by the beneficiaries of insurance contracts concluded with social security mutual societies when, on the occasion of the regularization carried out by the Tax Administration, such contributions could not at any time be subject to reduction or reduction of the tax base of the tax, they cannot be considered full income from work and, therefore, they are not subject to taxation in the Personal Income Tax as income from work.
In the case of contributions made prior to January 1, 1999 , when the amount of the contributions that could not be subject to reduction or reduction in the tax base cannot be accredited, the 75 percent of the retirement or disability benefits received.
See in this regard the second transitional provision of the Personal Income Tax Law .
Notwithstanding the above, benefits for permanent disability or major disability, received by professionals not included in the special Social Security regime for self-employed or self-employed workers, are exempt from Personal Income Tax . that derive from insurance contracts signed with social security mutual societies that act as alternatives to said Social Security regime, provided that they are benefits in situations identical to those provided for absolute permanent disability or major Social Security disability.
See in this regard the exemption for "Benefits for absolute permanent disability or great disability received from Social Security or by the entities that replace it" in Chapter 2.
The remaining benefits, including those received due to death, are taxed as income from work in their entirety.
Consolidated rights provision
The early provision of economic rights of mutual members is possible in the same cases provided for pension plans. The amounts received for the early disposition, total or partial, of the consolidated rights are taxed as income from work.
• Corporate social security plans and other collective insurance contracts that implement the pension commitments assumed by companies.
It is necessary to distinguish:
Business social security plans:
The benefits received by the beneficiaries of corporate social security plans are in all cases considered income from work.
Keep in mind that the early provision of economic rights of the insured in these cases is possible in the same cases provided for pension plans (long-term unemployment or serious illness).
For more information, the concept and requirements that corporate social security plans must meet are discussed in Chapter 13.
- Collective insurance contracts, other than social security plans, that implement the pension commitments assumed by companies.
Retirement and disability benefits received by beneficiaries of collective insurance contracts, other than corporate social security plans, that implement the pension commitments assumed by companies, in the terms provided for in the first additional provision of the consolidated text of the Law regulating Pension Plans and Funds, and in its implementing regulations, they will be integrated as work income into the tax base to the extent that their amount exceeds the contributions imputed for tax purposes and the contributions directly made by the worker.
Please also take into account that, in accordance with the first Additional Provision of the consolidated text of the Law on the Regulation of Pension Plans and Funds in the wording given by Law 27/2011, of August 1 (BOE of August 2), Since January 1, 2013, collective dependency insurance has been accepted as insurance contracts suitable for implementing pension commitments assumed by companies. See the point related to dependency insurance in this same section.
Regarding the right of redemption in collective insurance contracts that implement the pension commitments assumed by companies, see the first Additional Provision of the Personal Income Tax Law .
The benefits received by the heirs as a result of the death of the insured worker do not constitute income from personal work as their receipt is subject to Inheritance and Donation Tax.
• Insured pension plans
The benefits received by the beneficiaries of the insured pension plans are in all cases considered income from work.
The concept and requirements of insured pension plans are discussed in Chapter 13.
• Dependency insurance
The benefits received by the beneficiaries of dependency insurance in accordance with the provisions of Law 39/2006, of December 14, on the Promotion of Personal Autonomy and Care for people in a situation of dependency, are considered income from work ( BOE of December 15).