In a significant change to tax policy, the Spanish Treasury has been mandated to refund personal income tax to thousands of pensioners who contributed to old labor mutual societies between 1968 and 1978. The adjustment follows a series of Supreme Court rulings that deemed these contributions resulted in double taxation , thus obligating the government to amend its approach to taxation for affected individuals.
With the enactment of Law 5/2025 , those impacted can now request a refund of the personal income tax related to the fiscal years spanning from 2019 to 2022, in addition to any applicable non-prescribed periods.
The number of impacted pensioners is estimated to be over 600,000 , with some individuals potentially owed refunds reaching up to 4,000 euros . This situation has resulted in delays from the Treasury as they navigate the logistics of processing these refunds and accommodating the unprecedented demand.
<img alt="IRPF withholding calculator 2025: how to use it online to know your minimum withholding recommended by the Treasury" width="375" height="142" src="https://i.blogs.es/7c2e61/calculadora/375_142.jpeg"/>Why is the Treasury returning personal income tax to mutual members?
The initiative to return funds to the mutualists stems not from government philanthropy, but rather from Supreme Court rulings that identified the over-contribution of pensioners to the Labor Mutual Insurance Funds. These rulings recognized the pensioners’ right to a tax reduction of 25% for contributions made between 1967 and December 31, 1978.
The Supreme Court determined that contributions made to mutual societies—including organizations like MUFACE , MUGEJU , or ISFAS —were subjected to full taxation when benefits were utilized, leading to double taxation for those involved.
This generated a disparity, as individuals contributing to the Social Security system (INSS) could benefit from tax deductions not available to mutual society members.
The Law 5/2025, enacted on July 24, was specifically designed to align with Supreme Court directives. It includes measures to streamline claims and expedite the process for affected individuals seeking refunds.
<img alt="64% of Spaniards believe that they pay more in taxes than they receive from the State. It's actually the other way around" width="375" height="142" src="https://i.blogs.es/4dc13e/pexels-mikhail-nilov-6963921/375_142.jpeg"/>Treasury sets deadline to return personal income tax
In September of the previous year, the Treasury initiated the process of addressing this imbalance among pensioners. A form was made available on the Tax Agency’s website, allowing eligible individuals to lodge their claims. Those eligible for a refund include:
- Pensioners from the Social Security and the Social Institute of the Navy who contributed to labor mutual societies between 1967 and 1978 and experienced double taxation.
- Holders of complementary pensions issued by special funds of INSS , MUFACE , MUGEJU , or ISFAS , concerning contributions made prior to 1979.
- Heirs of affected mutual members, specifically if the member passed away between 2019 and 2024.
The Tax Agency has set a deadline of December 31, 2025 to finalize these refunds, which is contingent upon compliance within six months after the general declaration period’s closure on June 30. In instances of non-compliance, claimants are entitled to seek late payment interest up to 4.0625% , as noted by the consumer organization OCU .
Moreover, reports from The Newspaper indicate that the Treasury’s strategy might involve fragmented payments , which could span various timelines. This is primarily a result of complexities associated with individual cases that necessitate separate evaluations due to a lack of documentation or discrepancies in calculations.
For those who have yet to claim their refunds, the relevant Tax Agency form is accessible until February 2, 2026, for fiscal years 2020, 2021, and 2022. Subsequent deadlines have been established for claims regarding different financial years extending to February 2, 2028.
The changes in tax policy reflect significant adjustments driven by legal rulings, highlighting the government’s responsiveness to pensioners who were previously subjected to unjust taxation. This process is a move towards ensuring fairness and transparency in the taxation system, and it represents a pivotal chapter in the financial history of Spain.