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V2678-15 16 September 2015 · SG de Tributación de las Operaciones Financieras Criterion in force
IRPF · rendimientos del capital mobiliario

Returns on non-SIALP life insurance are not exempt even if reinvested into a Long-Term Savings Plan

The inquirer asks whether the surrender of a life insurance policy from 1994 can benefit from the Long-Term Savings Plan (SIALP) tax exemption if the funds are reinvested into one. The Directorate General for Taxes (DGT) responds that the exemption applies exclusively to SIALPs and that reinvesting proceeds from a standard life insurance policy into a SIALP does not generate any tax exemption or relief.

The question raised

Whether, in the event of a total redemption of the insurance policy, the exemption provided for in Article 7, letter (n) of the Personal Income Tax Law may be applied to the positive returns obtained, or whether such returns could be exempt if they are allocated entirely to the contracting of an Individual Long-Term Life Insurance or an Individual Long-Term Savings Account. In the negative case, whether any reduction or tax credit would be applicable to said returns.

The DGT's ruling

The exemption under Article 7(n) of the Personal Income Tax Law (LIRPF) is only applicable to returns from Long-Term Savings Plans (SIALP or CIALP) that meet all their legal requirements. It is not possible to apply this exemption to life insurance policies other than SIALPs, even if the redemption amount is intended to establish one. Tax-neutral transfer is only possible between different long-term savings plans, not from a conventional life insurance policy.

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