7.2.3.11 Reduction applicable to income derived from certain insurance contracts

When deferred capital is received, the part of the benefit corresponding to premiums paid before December 31, 1994 that was generated before January 20, 2006, will be reduced as follows:

1. The portion of the total net income corresponding to each of the premiums paid prior to December 31, 1994 will be determined. To determine the portion of the total return obtained that corresponds to each premium, said return will be multiplied by the weighting coefficient resulting from the following quotient:

   • In the numerator, the result of multiplying the corresponding premium by the number of years elapsed since it was paid until the collection of the payment.

   • In the denominator, the sum of the products resulting from multiplying each premium by the number of years elapsed since it was paid until the collection of the payment.

2. To determine the portion of the benefit that, corresponding to each of the premiums paid prior to December 31, 1994, was generated prior to January 20, 2006, the benefit shall be multiplied by the weighting coefficient resulting from the following quotient:

   • In the numerator, the time elapsed between the payment of the premium and January 20, 2006.

   • In the denominator, the time elapsed between the payment of the premium and the date of collection of the benefit.

3. The total amount of capital corresponding to life insurance policies to which the net return described above would have been applied, obtained from January 1 until the time of temporary allocation of the deferred capital, will be calculated.

4. When the sum of the deferred capital and the amount referred to in number 3 above is less than 400,000 euros, the amount to be reduced from the total net income will be determined. For these purposes, the percentage of 14.28 percent shall be applied to each of the parts of the net income calculated in accordance with the provisions of point 2 above for each year elapsed between the payment of the corresponding premium and December 31, 1994. When more than six years have passed between these dates, the percentage to be applied will be 100%.

5. Where the sum of the deferred capital and the amount referred to in section 3 above is greater than 400,000 euros, but the result of the provisions in section 3 is less than 400,000 euros, the reduction indicated in section 4 above will be applied to each of the parts of the net income generated prior to 20 January 2006 that proportionally correspond to the part of the deferred capital which, added to the amount in section 3 above, does not exceed 400,000 euros.

6. 6 When the result of the provisions in the third section above is greater than 400,000 euros, no reduction will be made.