GENERAL INDICATIONS RELATING TO THE TAX SCHEME IN SPAIN IN GENERAL.
PREMIUM TAX SCHEME
It is possible to have early access to the benefits accrued provided that they are over ten years old.
The amounts received will be subject to the legal applicable tax rules for pension plans.
The reduction in the contributions made to (sistemas de prevision de empleo e individuales) can be applied even when you have had early access to the benefits accrued always provided you have at least ten years worth of contributions.
The premiums paid by insured parties for insured pension plans that fulfil the regulatory requirements may be deducted from the IRPF taxable amount, the maximum limit being the lesser of the following two amounts:
- 30 percent of the sum of the net income from earnings and financial activities received individually during the financial year.
- 8,000 euro per annum.
This maximum limit is a combined amount for all payments and contributions to pension plan systems.
Regardless of the deduction applied based on the aforementioned limits, taxpayers whose spouse does not obtain any net income from earnings and financial activities, or who obtains less than 8,000 per annum for such income, may deduct from the taxable amount the contributions made to pension plan systems held by said spouse, with a maximum limit of 2,500 euro per annum (these contributions are not subject to ISD).
When it was not possible to deduct the aforementioned contributions from the taxable amount due to insufficiency thereof or application of the percentage limits, they may be deducted in the following five tax years, always respecting the aforementioned limits.
Contributions made to insured pension plans in favour of people with a certain level of disability and kinship may also be deducted from the taxable amount, pursuant to the regulatory limits prevailing at any time (these contributions are not subject to ISD):
All the aforementioned deduction limits are combined for the sum of the contributions made by the taxpayer to pension plans, mutual insurance pension plans, insured pension plans, company pension plans and dependency insurance policies.
TAX SCHEME FOR BENEFITS
The benefits received by the beneficiaries of insured pension plans are subject to IRPF as personal earned income, regardless of whether or not they are survivor or death benefits.
Benefits are taxed in their entirety and under no circumstances may the amount corresponding to surplus contributions be deducted.
WITHHOLDINGS ON ACCOUNT OF TAXES AND REGULATED OBLIGATIONS
Net earned income derived from insured pension plan benefits are subject to withholding on account of IRPF, pursuant to the system for calculating withholdings applicable to earned income.
In this respect, the paying entities must apply the referred percentage to the part of the benefit subject to taxation, calculated in accordance with the aforementioned criteria, and pay in the resulting amount to the Public Treasury.
Additionally, they are obliged to supply annual information to the policyholders of insured pension plans, as well as to the Tax Authorities [AEAT], regarding all the contributions made during each tax period, whether in favour of the policyholder's insured pension plans or in favour of the spouse or a disabled person.