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V2985-14 4 November 2014 · SG de Tributación de las Operaciones Financieras Criterion in force
IRPF · rendimientos del capital mobiliario

Life insurance payouts taxed as income from movable capital depending on method of receipt

A taxpayer has requested clarification on the tax treatment of a life insurance benefit contracted in 1992. The DGT explains that taxation depends on whether the payment is received as a lump sum, a life annuity, or a temporary annuity.

The question raised

Tax treatment of the benefit, in the event that it is received in the form of capital or as a life or temporary annuity.

The DGT's ruling

Life insurance benefits are returns on movable capital. If it is deferred capital, the return is the difference between the capital and the premiums. If it is a life or temporary annuity, percentages are applied to the annuity based on the recipient's age or the duration of the annuity. For deferred annuities, the obtained profitability is added. Reduction and tax compensation rules exist for contracts prior to 2006.

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