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V0589-18 1 March 2018 · SG de Tributación de las Operaciones Financieras Criterion in force
IRPF · rescate

Redemption amount of funeral insurance classified as capital gain or loss for Income Tax purposes

An insurance company has requested clarification on the tax treatment of the amount paid upon the redemption of a single-premium funeral insurance product. The DGT has determined that, as it is not life or disability insurance, the amount must be taxed as a capital gain or loss.

The question raised

Tax classification of the amount paid as a consequence of the surrender, in the Personal Income Tax of the recipient.

The DGT's ruling

Since funeral insurance is not classified as life or disability insurance, the surrender value does not constitute income from movable capital pursuant to Article 25.3.a) of Law 35/2006. Therefore, the income derived from the surrender must be classified as capital gains or losses in accordance with Article 33 of the same law. Furthermore, these amounts are not subject to withholding tax.

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