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V1490-14 6 June 2014 · SG de Fiscalidad Internacional Criterion in force
IRPF · derechos pasivos

Insurance passive rights taxed according to beneficiary's fiscal residence

A consultant moving to the Dominican Republic asks how commissions from insurance portfolio assignments are taxed. The DGT clarifies that the treatment depends on whether the individual retains their Spanish fiscal residence or becomes a non-resident.

The question raised

Application of the Convention between the Kingdom of Spain and the Dominican Republic and, if the interested party is a resident in the Dominican Republic, the consideration of the amount received annually by the consultant upon the entry into force of the aforementioned convention and the necessity of the payer (the Insurance Company) to apply withholding on the amounts paid to the interested party as Passive Rights from the ceded insurance portfolio.

The DGT's ruling

If the consultant is a resident in Spain, commissions for passive rights are professional income subject to IRPF withholding. If they are a non-resident, they will be taxed under the Non-Resident Income Tax (IRNR) for income obtained in Spanish territory, with a tax rate of 24.75% for the 2014 fiscal year. The insurer is obliged to apply the corresponding withholding in accordance with the applicable regulations.

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