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V2365-16 30 May 2016 · SG de Tributación de las Operaciones Financieras Criterion in force
IRPF · renta en especie

Perception of a company-paid mixed life insurance policy may constitute benefits in kind

A taxpayer has requested clarification regarding the tax implications of a mixed life insurance policy taken out by their company to cover severance pay. The Directorate General for Taxes (DGT) has ruled that if the company's waiver of its rights to the policy is contingent upon an uncertain event, a benefit in kind will arise once such rights become unconditional.

The question raised

Impact on the taxpayer's Personal Income Tax (IRPF) regarding the payment of the premium by the company and the fulfillment of the non-compete agreement.

The DGT's ruling

If the company's waiver of the right of redemption and the right to modify beneficiaries is contingent upon an uncertain future event, there is no income upon payment of the premium. When said waiver becomes unconditional, income in kind is generated, classified as employment income, and valued by the mathematical provision. Furthermore, the portion of the premium corresponding to the capital at risk in the event of death is always considered employment income in kind. The insurance amounts received after the imputation of the income in kind shall be considered income from movable capital.

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