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V2466-24 9 December 2024 · SG de Tributación de las Operaciones Financieras Criterion in force
IRPF · seguro de vida mixto

Life insurance mixed policy in Germany with employer premiums: survival benefit taxed in Spain as movable capital income under CDI ES-DE

A Spanish tax resident receiving in 2023 a survival benefit from a mixed life insurance policy taken out in Germany, where the German employer paid premiums during certain periods, concludes the DGT that Spain has exclusive taxing power (Art. 17.1 or subsidiarily Art. 20 CDI Spain-Germany) and that the benefit is subject to tax as movable capital income (Art. 25.3 LIRPF), based on the difference between the amount received and deductible employer premiums.

The question raised

Question posed: Classification of the survival benefit in the form of capital for Personal Income Tax purposes.

The DGT's ruling

The conditions of art. 17.3 OECD Model Tax Convention for shared taxation (incentivized contributions exceeding twelve years) are not met because the period during which the employer paid premiums with tax advantages in Germany is less than twelve years. The benefit is taxed in Spain as income from movable capital (art. 25.3.a.1º LIRPF): base = capital received minus premiums paid. The premiums paid by the employer are only deductible if they were fiscally imputed to the insured person without tax advantage. No reduction is applicable for the consumed capital at risk due to death because said capital exceeded 5% of the mathematical provision during its term. If Germany applies withholding incorrectly, no deduction for double taxation is applicable in Spain.

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