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V1665-19 5 July 2019 · SG de Tributación de las Operaciones Financieras Criterion in force
IRPF · renta en especie

Company-paid mixed life insurance may constitute a benefit in kind for executives

A company has requested clarification regarding the tax treatment of a mixed life insurance policy for its Chairman. The DGT indicates that if the company's waiver of redemption rights becomes unconditional, it results in a benefit in kind for the insured individual.

The question raised

Treatment in Personal Income Tax (IRPF) of the insured party of the insurance contract. Obligation to perform withholding or payment on account.

The DGT's ruling

If the company's waiver of the right to redemption and to modifying beneficiaries becomes unconditional, it gives rise to a benefit in kind for the insured. This income is classified as employment income and is valued by the mathematical provision minus the amount subject to redemption. Likewise, the portion of the premium corresponding to the capital at risk shall always be considered employment income in kind. The company must make the corresponding withholding tax payment.

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