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V0981-20 21 April 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · auxilio por defunción

Death benefits are exempt from Personal Income Tax up to the limit of the funeral expenses incurred

A query is made regarding the tax treatment of benefits received upon death from a mutual insurance company and the calculation of capital gains on real estate. The Tax Agency responds that death benefits are exempt up to the amount covering burial expenses and that compensation for occupational accidents constitutes income from employment.

The question raised

Issue raised - Acquisition and transfer value of real estate, for the purpose of calculating capital gains or losses.

The DGT's ruling

Benefits for death received from a mutual insurance company are income from employment, but death benefits are exempt to the extent that they cover funeral expenses (Art. 7.r LIRPF). Lump-sum compensation for death due to an occupational accident or professional illness constitutes income from employment. Funeral expenses exceeding the exempt limit may qualify for a 30% reduction due to irregularity.

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