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B Law & Tax
19 July 2023

Tax advisor: The Supreme Court clarifies the recovery in the Personal Income Tax of contributions to old labor mutual insurance companies.

The Supreme Court clarifies the IRPF recovery process for retirees who made contributions to old labor mutual funds. It is established that the part of the current pension corresponding to those contributions not reduced can be deducted by 25%. This means that the taxpayer must declare in the IRPF his pension, including only 75% instead of 100% of the part of the pension related to those old contributions. This avoids double taxation.

Between 1967 and 1978, mutual insurance companies did not allow the reduction of contributions in personal income tax returns. This has led retirees to seek the possibility of subtracting these contributions from their pensions to avoid double taxation. The Second Transitory Provision of the Personal Income Tax Law allows a 25% deduction in the taxable base to offset these old contributions. According to recent Supreme Court rulings, retirees can file corrective returns to recover the excess taxation, including legal interest. In addition, the rulings also allow the reduction of the personal income tax base in future returns. The heirs of these retirees are also entitled to claim refunds from the tax authorities for the overpayment in personal income tax.

B Law & Tax International Tax & Legal Advisors.


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