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V0243-24 ·29 February 2024 ·consulta-vinculante Medium impact
Tax

Loan cancellation via payment protection insurance is subject to capital gains tax

A taxpayer queried whether the benefit from a payment protection insurance policy, which cancels a loan and leaves a surplus, is subject to Personal Income Tax (IRPF). The Directorate General for Taxes (DGT) ruled that the transaction does not constitute insurance income, but rather a capital gain resulting from a change in the composition of the taxpayer's assets.

In 5 key points

How it affects those involved

Taxpayers receiving surplus funds from insurance policies used to settle debts must report these amounts as capital gains rather than insurance income.

Lifecycle

2024-02-29PublishedPublished in the BOE
Official text Based on BOE data (boe.es). Information, not advice.

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This analysis is informational only and does not constitute legal advice or create a client-adviser relationship. BM Consulting.
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