Reductions for compensatory pensions and annuities for food

Regulations: Art. 55 Law Personal Income Tax

1. Compensatory pensions in favor of the spouse

In accordance with civil legislation (article 97 of the Civil Code) the spouse for whom separation or divorce produces economic imbalance in relation to the position of the other, which implies a worsening of their previous situation in the marriage, has the right to a pension that It will be established in the judicial resolution of separation or divorce or in the regulatory agreement formalized before the Court Clerk or the Notary. 

For the payer , the compensatory pension paid, provided that it has been established in the judicial resolution, or has been agreed upon by the spouses in the agreement regulating the separation or divorce, reduces their general tax base without it being negative as a consequence of this decrease. The remainder, if any, will reduce the tax base of the savings without it, either, being negative as a consequence of said decrease.

For the recipient , the compensatory pension received from the spouse constitutes, in any case, work performance not subject to withholding because the spouse paying the pension is not obliged to withhold it.

2. Annuities for food in favor of people other than children

In accordance with the provisions of article 143 of the Civil Code, spouses, ascendants and descendants, as well as siblings are reciprocally obliged to provide support in the cases and terms indicated in the aforementioned article.

Now, when the obligation to provide food falls on the taxpayer, it is necessary, for the purposes of its treatment in Personal Income Tax , to distinguish two cases:

1. Annuities for foodstuffs in favour of children

   For the payer , the amounts paid for child support do not reduce the general tax base, but are subject to a special treatment consisting of that, when the amount of said annuities is lower than the general taxable base and there is no right to the application of the minimum by descendants, they are subject to separate taxation in order to limit the progressivity of the tax scales. 

   The liquidation treatment of annuities for maintenance in favor of children , whose amount is less than the general liquidable base subject to tax, is discussed in Chapter 15.

   For the children receiving of said annuities, they constitute exempt income, provided that they are received by judicial decision or by virtue of the regulatory agreement judicially decreed or formalized before the Judicial Secretary or in a public deed before Notary referred to in article 90 of the Civil Code, or the equivalent agreement provided for in the regulations of the Autonomous Communities.

2. Annuities for food in favor of other people

   For the payer , the amounts paid as alimony in favor of persons other than children, provided that they are established by judicial decision, reduce the payer's general tax base without being negative as a consequence of this decrease. The remainder, if any, will reduce the tax base of the savings without it, either, being negative as a consequence of said decrease.

   For the recipient of the same, these annuities constitute income from work not subject to withholding.

3. Special case: compensatory pension and annuities for food without distinction

In cases of legal separation or divorce, there will normally be established, on the one hand, a compensatory pension in favor of one of the spouses, and, on the other, the obligation to pay an amount in support of the children, to the parent who does not have responsibility for them.

In the special case that the obligation of a single payment is established, without specifying in the judicial resolution or in the regulatory agreement which part corresponds to compensatory pension and which part to annuities for maintenance, the impossibility of determining the amount corresponding to the pension compensatory measure prevents the reduction of the base from being applied for this concept. All this without prejudice to the fact that at a later time the amounts corresponding to each concept may be judicially specified.

Summary table of the tax treatment of compensatory pensions and alimony annuities