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A query was raised regarding whether a collective insurance benefit should be settled as a disability or death benefit. The Directorate General for Taxes (DGT) has determined that, as it pertains to disability, the amount constitutes employment income and must be taxed under the beneficiary's Personal Income Tax (IRPF).
The ruling clarifies the tax treatment of collective insurance payouts, confirming that disability benefits are subject to Personal Income Tax as employment income, which may affect the net amount received by beneficiaries.
The tax team reviews your specific situation.
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