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V2449-17 2 October 2017 · SG de Tributación de las Operaciones Financieras Criterion in force
ISD · seguro de vida

Life insurance death benefits subject to Inheritance and Gift Tax if policyholder and beneficiary are different persons

A person received a life insurance payout following their mother's death and inquired whether it should be taxed under Personal Income Tax (IRPF). The Directorate General for Taxes (DGT) ruled that, because the policyholder and the beneficiary are different individuals, the amount is subject to Inheritance and Gift Tax rather than Personal Income Tax.

The question raised

Whether the amount received is subject to Personal Income Tax.

The DGT's ruling

When the policyholder and the beneficiary of a life insurance policy are different persons, the amounts received are taxed under Inheritance and Gift Tax. Conversely, if the policyholder and the beneficiary are the same person, the amounts shall be subject to Personal Income Tax. Given that in this case the policyholder was the mother and the beneficiary was the daughter, the amount must be taxed under Inheritance and Gift Tax.

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