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V1322-20 8 May 2020 · SG de Tributación de las Operaciones Financieras Criterion in force
IRPF · ganancia patrimonial

Partial redemption of a life annuity requires taxation on the entire exempt capital gain

A taxpayer over 65 who utilised the exemption for reinvestment in life annuities has enquired whether, upon partially redeeming the annuity, they must file a supplementary tax return for only the redeemed portion or for the total amount. The Directorate General for Taxes (DGT) has ruled that a partial redemption triggers taxation on the entirety of the gain that was initially exempt.

The question raised

Whether the supplementary Personal Income Tax return corresponding to the 2016 fiscal year must be filed only regarding the partial redemption or for the entirety of the reinvestment.

The DGT's ruling

The partial redemption of the economic rights of the established life annuity determines the taxation of the entirety of the capital gain that was, in principle, exempt due to reinvestment. The taxpayer must attribute said gain to the year of its acquisition through a supplementary self-assessment including late payment interest.

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