For the Tax Agency, collecting a pension and a salary is the same. Pensions are considered income from work and, therefore, are subject to the same Personal Income Tax (IRPF) tax as the income from the work of an employee, with a withholding that varies depending on of the economic and family situation of the beneficiary. When the time comes to submit the income statementworkers and pensioners whose work income is less than 22,000 euros per year are not required to present it, a threshold that is lowered to 15,000 euros in the case of having more than one payer, when the sum of the amounts received from the second and remaining payers exceeds 1,500 euros per year. But also there are certain types of pensions that are exempt from personal income tax regardless of whether or not they exceed these limits. The Tax Agency collects the exceptions on its website.
Income exempt from personal income tax is included in article 7 of the Personal Income Tax Law and includes the following pensions:
-Las pensions recognized to the taxpayer by the Social Security or by the entities that replace it as a consequence of absolute permanent disability or severe disability. This exemption applies both to pensions from Social Security and those paid by entities that replace it as a result of absolute permanent disability or severe disability. And the ceiling of this exemption will be the maximum benefit recognized by Social Security, taxing the excess as earned income.
-The pensions of orphans and in favor of grandchildren and siblings under 22 years of age or disabled for all work, received from the public Social Security schemes and passive classes.
-The benefits that, in situations identical to the two previous ones, are recognized for professionals not included in the special Social Security regime for self-employed or self-employed workers by the mutual benefit societies that act as alternatives to the special regime of the mentioned Social Security.
-Pensions for uselessness or permanent disability of the public Social Security and Passive Class schemes, provided that the injury or illness that caused them completely disables the recipient of the pension for any profession or trade, and those paid equally by the public Social Security schemes and Passive Classes in favor of grandchildren and siblings under 22 years of age or disabled for all work.
-Las recognized pensions for injured or mutilated persons by Civil war (1936/1939) of the regime of State Passive Classes or by specific legislation.
-Las pensions derived from acts of terrorism and also widow’s pensions derived from acts of terrorism.