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We blog legal and tax information targeted to resident and non resident UE citizens in Spain to help them with these issues and to solve doubt and generate controversy about these matters.

TAX REFORM - TAXATION OF THE PENSIONS
02 January 2015 @ 13:06

1) Disposal of funds of a pension plan or similar products:

For the already existing cases that allowed the anticipated disposal of the funds placed on a pension plan (serious condition or illness and long term unemployment), now the law foresees a new one: the amounts link to the investments placed more than 10 years ago. As they can be disposed in anticipate they can be object of seizure as well.

Withdrawing of these amounts can be simultaneous with new placements in the fund provisions for the contingencies that might occur. The disposal of these amounts related to investments placed more than ten years ago will be able to be effective from 1 January the 2025.

2) Limits to contributions to pensions plans:

The limit to the contributions to pensions plans of the spouses that don't develop any job or economic activity or in case of developing doesn't provide incomes over €8,000 is risen from €2,000 to €2,500 per year.

And limits for contribution to own pensions plans now for all kind of tax payers no matter their age are the lower of these two limits:

- 30% of their revenues from jobs or economic activities or

- €8,000 per year (before the tax reform it was €10,000 per year and €12,500 if taxpayers was older than 50 years-old).

3) Pensions plans and reduction of 40% or 75% for contributions made before 1 January 2007:

It gradually dies out the possibility of making the option for the previous Income tax law.

Remember that with retirement is not compulsory to dispose of a pension plan either in terms of the periodic rent or in terms of a whole amount of capital in just one go. So if retirement takes place from 2015 on, the reduction of former law of 40%-75% foreseen in case you apply for the payment of the funds of the plan in one payment will be effective if you apply for it during the years 2015, 2016 or 2017. Afterwards, the capital will be reimbursed to the pensioner without tax reduction of any kind.

If retirement took place between 2011 and 2014 and funds haven’t been applied in capital yet, reductions will be effective if application of the capital funds takes place within the period of the next eight years from retirement date.

If retirement took place in 2010 or previously and funds haven’t been applied in capital yet, reductions will be effective if application of the capital funds takes place before 31 December 2018, otherwise this tax benefits will be lost.



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