The Tax Agency is also wrong and this time it was the Supreme Court that forced it to rectify. Sentence 707/2023 determines that retired mutual members who contributed to the Banking Labor Mutuality have been paying extra taxes for their retirement pension for years.
The ruling changes the general criteria of the Treasury on how the pensions generated by mutual members between 1967 and 1978 should be taxed, which will allow thousands of mutual members to claim a refund of what they have paid more to the Treasury in personal income tax.
What the ruling says about how pensions should be taxed
The Supreme Court ruling recognizes the right of pensioners who contributed to the Bank’s Labor Mutual Insurance to apply a 100% reduction for their contributions until 1966, including that year and a 25% reduction for contributions between 1967 and 1978.
Unlike Security contributions, which are deductible in Personal Income Tax, payments to the mutual insurance company were not and retired mutual members or those with a disability pension would have paid more taxes and suffered double taxation.
The ruling allows a 25% reduction and for mutual members who had been paying 100% of those personal income tax contributions to do so for the 75% that would correspond to their retirement or disability pension.
This reduction will be applied proportionally to the time spent contributing as a mutual member over the entire working life.
Which retirees can claim their pension from the Treasury?
The ruling of the Supreme Court refers to the mutual retirees of the Banking Labor Mutuality. However, it is a ruling that establishes jurisprudence.
According to different law firms such as Vento Abogados, Benayas Asesores or Legálitas, the result of the ruling can be extended to all people who receive a Social Security pension and who contributed to a Labor Mutual Insurance before 1978.
How many years can you claim?
Mutual members can claim non-prescribed personal income tax years. This means that you can claim the last four years, which are those that would not have expired, just as occurs with the Treasury deadline to claim tax debts.
In this sense, the four-year period begins to count from the day after the filing deadline ends or from the day after the personal income tax was filed if it was filed after the deadline.
Thus, in 2023 the income for 2022 could be claimed, which is what was presented this year, as well as those for 2020, 2021 and 2019 if they are presented on time. The rest would be left out.
How much can be recovered?
Vento’s tax advisor, Lydia Campos, estimates that the figure ranges between 2,400 and 3,000 euros.
In any case, the specific amount depends on each mutual member. As a general rule, you will be able to recover 25% of the pension income that comes from your contributions to the mutual insurance company.
As an example, imagine a retiree with a pension of 18,000 euros (close to the average pension) that he contributed between 1967 and 1978 to his mutual insurance company (11 years) and a working life of 40 years. 27.5% of his professional career and contributions would be to the mutual insurance company, which is equivalent to 4,950 euros of his current income.
On that amount, 25% or 1,237.5 euros would have to be restored to the total. As a consequence, it would only incorporate 16,762.5 euros into its tax base instead of 18,000 euros, and of course, the income result would be lower.
Come claim your pension if you are a mutual member
To recover the money paid in excess in personal income tax as a mutual member, you must request a rectification of the self-assessment to the treasury for non-prescribed years. This process can be carried out through the Renta Web program with a digital certificate, electronic DNI or the Clave system.