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A query was raised regarding whether disability payouts for absolute and permanent disability from an annually renewable life insurance policy are exempt from Income Tax (IRPF). The Directorate General for Taxes (DGT) ruled that the exemption does not apply because it is a life insurance policy rather than an accident insurance policy; therefore, it must be taxed as income from movable capital.
Taxpayers receiving disability benefits through life insurance policies covering illness must include these payments in their tax returns as income from movable capital, as they do not qualify for the specific exemptions applicable to accident insurance.
The tax team reviews your specific situation.
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