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V0555-19 14 March 2019 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · ganancia patrimonial

Reinvestment exemption for life annuities does not apply to retirement capital

A taxpayer inquired whether they could convert a Swiss retirement pension lump sum into a life annuity to avoid taxation on the full amount. The Directorate General for Taxes (DGT) ruled that the exemption cannot be applied because such capital does not constitute a capital gain arising from the transfer of assets.

The question raised

Whether it is possible to convert capital originating from Switzerland into a monthly life annuity in Spain through an insurance company and, thereby, be taxed on the corresponding monthly income instead of being taxed on the capital in the year it is received.

The DGT's ruling

The exemption under Article 38 of the Personal Income Tax Law (LIRPF) applies exclusively to capital gains derived from the transfer of assets by individuals over 65 years of age. Capital received by way of supplementary retirement benefits does not qualify as a capital gain from the transfer of assets. Therefore, the exemption for the establishment of a life annuity using said amount is not applicable.

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