FAQs

The second transitional provision (DT 2) of the LIRPF offers the possibility of reducing the amount to be included as work income in the income tax return of each fiscal year when retirement or disability pensions are received by those members whose contributions could not at the time be subject to reduction or decrease in the tax base. In this way, double taxation of these contributions is avoided.

DT 2 is applied in accordance with the provisions of the various rulings of the Supreme Court, the latest dated February 28, 2023 and January 10, 2024.

A refund will be required if, after applying DT 2, the tax rate is lower than the amounts previously paid for filing a previous declaration or for the withholdings incurred.

In order to apply the reduction provided for in DT 2 it is necessary to have made contributions to mutual societies, in any case on a date prior to January 1999, and that these contributions could not have been subject to reduction or decrease in the tax base of the tax in accordance with the legislation in force at any given time.

The reduction to be applied varies depending on the date on which the contributions were made and the type of mutual fund to which they were made.

The application of DT 2 is not applicable for those who receive pensions:

• satisfied by Passive Classes to public officials when these have only been included throughout their working life in the Passive Classes regime, as it is not a mutual fund.

• obtained from contributions to self-employed workers' mutual funds since the contributions were already deductible at the time. In this way, there is no double taxation on the pension now obtained.

• widow's pension, not being included in DT 2, as it does not derive from contributions from the recipient of this pension.

• non-contributory, as they are not included in DT 2, since they do not come from previous contributions.

The pensions that may be eligible for reduction are as follows:

1. Satisfied by the INSS or the Social Institute of the Navy.

   The reduction may be applied:

   • When contributions were made to labor mutual funds

     • Prior to 01/01/1967 : The portion of the retirement benefit corresponding to contributions made prior to 01/01/1967 will be reduced to 100%. That is, this part of the pension will not be taxed.

     • Between 01/01/1967 and 31/12/1978: The portion of the retirement benefit corresponding to contributions made during that period will be reduced by 25%. That is, only 75% of this part of the pension will be taxed.

   • When contributions were made to substitute mutual funds of the Social Security management entities prior to 01/01/1979: The portion of the retirement benefit corresponding to contributions made during that period will be reduced by 25%. That is, only 75% of this part of the pension will be taxed.

2. Supplementary pensions

   • General assumption

     The pensions complementary to the Social Security pension or Passive Classes, which derive from contributions to mutual societies, are currently paid by pension plans or by the mutual societies to which these contributions were made.

     In these cases, the part of the benefit corresponding to contributions made before 1 January 1995 will be reduced by 25%. That is, only 75% of this part of the pension will be taxed.

   • Satisfied by special funds from public entities

     These pensions can be obtained by some public officials as a supplement to their main pension.

     Regardless of whether your main pension is entitled to the application of DT 2 or not, these pension supplements may give you the right to apply DT 2 if the mutual societies to which the contributions were made have been integrated into the different special funds of the INSS, Muface, Mugeju and Isfas, which are the ones that currently pay this supplement.

     This benefit is applicable to these retirement pension supplements and the taxation of the pension will be reduced when it corresponds to contributions made to mutual funds.

     Therefore:

     • The "supplement" for retirement or disability pensions paid by the special fund of the INSS is subject to a 25% reduction for the part of the pension derived from contributions made to mutual societies until 01/07/1987 (date of integration into the special fund) . That is, only 75% of this part of the pension will be taxed.

     • The "supplement" of retirement or disability pension paid by Muface, Mugeju and Isfas is subject to a 25% reduction for the part of the pension derived from contributions made up to the date of integration of each of the mutual societies into the special fund, or up to 12/31/1978 if the integration date was earlier. That is, only 75% of this part of the pension will be taxed.

Yes. Among others:

Certain pensions paid by passive classes

Civil servants who have only been included throughout their working life in the Passive Classes regime will not have the right to the application of DT 2 on the pension received from Passive Classes (since Passive Classes is not a mutual fund).

However, if made contributions to a mutual fund they may apply DT 2 to the part of the pension that corresponds to said contributions under the terms indicated in the previous questions.

For example, a retiree who receives a civil servant pension for having worked as a public servant, but who for a few years contributed to a mutual fund because he worked for a private company, could apply DT 2.

Retirement pension that is collected simultaneously with the widow's pension

A widowed person can apply DT 2 for his or her own retirement or disability pension under the terms indicated in the previous questions. Only the widow's pension is excluded.

As of December 22, 2024, the date of entry into force of the Sixteenth Final Provision of Law 7/2024, of December 20, the applications for personal income tax refunds submitted before December 22, 2024 for the application of DT2 LIRPF for the years 2022 and prior years not prescribed, whose refund had not been agreed on that date are void, regardless of whether the application has been requested by submitting a self-assessment, a request for rectification of self-assessment or a form.

Personal income tax refunds for the years 2022 and earlier that have not expired and that have not expired resulting from the application of DT2 LIRPF may be requested year by year, starting in 2025 , by submitting the corresponding refund application forms that will be made available to members at the Tax Agency's Electronic Office during the voluntary period for filing the personal income tax return with the following calendar:

• In 2025, it will be possible to request a refund for personal income tax for the 2019 financial year and for previous years that have not expired.

• In 2026, the refund corresponding to the 2020 fiscal year can be requested.

• In 2027, the refund corresponding to the 2021 fiscal year can be requested.

• In 2028, the refund corresponding to the 2022 fiscal year can be requested.

For Income 2023 , if the AEAT has all the information, the reduction will already appear in the tax data with the concept ( “Adjustment for Mutual Societies - DT2 LIRPF”) , and the adjustment will be automatically applied in the declaration.

This calculation will also be carried out for taxpayers who have already received a favorable resolution for rectification requests from previous years.

In cases where the AEAT does not have sufficient information, it will not be able to provide the calculation in the tax data. In these cases, taxpayers who have made contributions to mutual societies will be informed to check whether they are entitled to apply the Second Transitional Provision of the Personal Income Tax Law in order to calculate the amount of the pension reduction that could be applicable to them.