Modification to Personal Income Tax

Photo

On Thursday 27 November 2014, Law 26/2014 was published in the Official State Gazette (BOE), which amended the Personal Income Tax (IRPF), a tax that affects the participants and beneficiaries of Pension Plans, with effect from 1 January 2015.

In 2006, Law 35/2006 of 28 November 2006 eliminated the possibility of applying the 40% reduction to Pension Plan benefits in the form of capital, although it established a transitional regime that allowed the reduction to be maintained for the amounts contributed (plus their yields) and/or contingencies occurring before 1 January 2007 (the date of its entry into force).

The new 2014 Law maintains this transitional regime, but only allows for its application in the following terms:

a. New contingencies (occurring on or after 1 January 2015), the 40% reduction may be applied when claiming the benefit in the same year in which the contingency occurs or in the following two years.

b. Old contingencies (occurring before 1 January 2015), two cases are distinguished:

The application of the 40% reduction is thus subject to a timetable summarized in the table below:

Year of occurrence ContingencyMaximum time limit for collection with 40% reduction
2010 or earlier31-Dec-2018
201131-Dec-2019
201231-Dec-2020
201331-Dec-2021
201431-Dec-2022
2015 or later31-Dec + 2 years

EPP Control Committee of CaixaBank, S.A.

Barcelona, January 2015.