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V0353-21 24 February 2021 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
ISD · seguro de vida

Life insurance payouts where the policyholder differs from the beneficiary are subject to Inheritance Tax

A taxpayer queried the taxation of a sum to be received following the death of a friend, as the beneficiary of their life annuity insurance. The Directorate General for Taxes (DGT) indicates that if the policyholder is a different person from the beneficiary, the taxable event for Inheritance and Gift Tax is triggered.

The question raised

Taxation of the amount received in the event of the death of a friend.

The DGT's ruling

When the policyholder of a life insurance policy is a person other than the beneficiary, the taxable event for Inheritance and Gift Tax occurs. The tax base shall be the amount of the sum received as capital or its equivalent through the capitalization of the life annuity. If the beneficiary receives other assets from the deceased, the insurance amount must be added to the value of said assets for the calculation of the tax.

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