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V1710-20 1 June 2020 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
ISD · seguro de vida

Life insurance payouts from collective policies taxed under Inheritance and Gifts Tax

A beneficiary asks whether a Swiss social security insurance payment after their brother's death is subject to income tax or Inheritance and Gifts Tax. The DGT states that a payment from a life insurance policy taken out by a company is subject to Inheritance and Gifts Tax.

The question raised

First question raised: Taxation in Spain of the amount received.

The DGT's ruling

If the benefit derives from a life insurance contract where the policyholder is a person other than the beneficiary, and does not fall within the assumptions of income from employment under Article 17.2.a) of the LIRPF, it shall be taxed under the Inheritance and Gift Tax. In this case, the taxpayer may apply the deduction for international double taxation provided for in the LISD, limited to the average effective tax rate in their tax return.

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