Several Supreme Court rulings forced the Treasury to modify a law to prevent the thousands of pensioners who made contributions to the old labor mutual societies between 1968 and 1978 from being subjected to double taxation, paying more in your personal income tax.
With the new Law 5/2025 approved, those affected can claim the refund of the personal income tax associated with the fiscal years from 2019 to 2022as well as non-prescribed exercises.
The estimated number of affected pensioners exceeds 600,000 and with amounts of up to 4,000 euros in some cases, which is causing delays on the part of the Treasury in their refund and the splitting of the payment.
Why is the Treasury returning personal income tax to mutual members?
The return to the mutualists is not a voluntary gesture by the Government, but is due to Supreme Court rulings in which it is recognized that pensioners contributed to the Labor Mutual Insurance Funds more than they should have, and the right to enjoy a tax reduction of 25%, for their contributions between 1967 and December 31, 1978.
The Supreme Court sentenced that contributions to mutual societies (such as MUFACE, MUGEJU or ISFAS, usually linked to police, military, judicial or banking bodies) were intended for benefits that were subsequently fully taxed, which generated double taxation for those taxpayers.
That is, they paid more taxes than a worker who had contributed to INSS in the General Regime, for example, given that a deduction could be applied to them for their contributions.
The new Law 5/2025of July 24, prepared to accommodate the rulings of the Supreme Court, included a provision for better channel complaints and accelerate the recognition of the return for the affected years.
Treasury sets deadline to return personal income tax
Last September, the Treasury began to settle the imbalance with thousands of affected pensioners, and to do so, it enabled a form on their website. Through it, those affected could claim their refund. These are:
- Pensioners from Social Security and the Social Institute of the Navy who contributed to labor mutual societies between 1967 and 1978 and suffered double taxation.
- Holders of complementary pensions paid by special funds of the INSS, MUFACE, MUGEJU or ISFAS, when the contributions are prior to 1979.
- Heirs of those affected mutual members, if the beneficiary died between 2019 and 2024
The Tax Agency has a deadline on December 31, 2025 to complete the refunds, since it must be done six months after the end of the general declaration period that ended on June 30. If the Treasury does not comply with that deadline, those affected may claim late payment interest of 4.0625%, as as they remember from the consumer organization OCU.
However, according to what was published by The Newspaperthe Treasury would have confirmed that in some cases, this payment will not be made in a single payment, but in a fragmented manner. This fragmentation is due to the complexity of the process since, in some cases, the lack of documentation or calculation discrepancies have generated different special circumstances that require individualized reviews, so in these cases payments will be settled as they are resolved.
Those affected who have not yet claimed their refunds can do so from the corresponding Tax Agency form until February 2, 2026, for the fiscal years 2020, 2021 and 2022; until February 2, 2027, for the fiscal years 2020, 2021; and until February 2, 2028 to claim the amounts for the 2022 financial year.
Image | Unsplash (Musemind UX Agency)
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