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Practical manual for Income Tax 2023.

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 Income Tax

The exemption affects 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 graduations in the field of Social Security, configured as follows:

  • Partial permanent disability for the usual profession: that which, without reaching the degree of total, causes the worker a decrease of no less than 33% in his normal performance for said profession, without preventing him from carrying out the fundamental tasks of said profession.
  • Permanent total disability for the usual profession: which disqualifies the worker from carrying out all or the fundamental tasks of said habitual profession, provided that he or she can dedicate himself or herself to another different one.
  • Permanent absolute incapacity for any work: which completely disqualifies the worker from any profession or trade.
  • Major disability: situation that affects the worker and produces the same effects as absolute disability, but 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 similar.

Of these graduations, only the benefits for absolute permanent disability or severe disability received from Social Security, give the right to exemption.

As regards pensions from abroad received by taxpayers of IRPF and which must be subject to taxation in Spain, they will be exempt, provided that the following requirements are met:

  • That the degree of recognized disability can be compared in its characteristics to absolute disability or severe disability.

  • That the entity that pays the benefit enjoys, according to the regulations of the country of origin of the pension, the status of a substitute for Social Security.

    For the purposes of equalization or, where appropriate, homologation of benefits for permanent disability in its degrees of absolute or severe disability, see the interpretative criteria established by the Supreme Court in Judgment number 346/2019, of March 14 ( ROJ : STS 810/2019).

Additional Information: Regarding the documents that the AEAT collects from recipients of disability pensions from foreign States who claim the application of the exemption of article 7.f) of the IRPF law they are those indicated below:

  • Resolution by which the benefit or income in question is recognized,
  • Official medical report, describing 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 functional limitations on work capacity.

This documentation must be accompanied by its corresponding translation into Spanish.

Likewise, the benefits granted to professionals not integrated into the special Social Security regime for self-employed workers or freelancers by the Social Security Mutual Societies that act as alternatives to the special Social Security regime mentioned are declared exempt, provided that they are benefits in situations identical to those provided for absolute permanent disability or severe disability by 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 work income, understood to be produced, in the case of concurrence of benefits from Social Security and the aforementioned mutual funds, in the provision of the latter.

Unlike the above, since they do not have the character of public benefits, benefits paid by any other entity or company are subject to and not exempt from Personal Income Tax , even if they are received as a result of permanent absolute disability or severe disability.