7,2,3,6. Income derived from life or disability insurance contracts and capitalization operations

This section will include monetary or in-kind income, as well as their corresponding withholdings or payments on account (which the program transfers to box 0597 on page 22 of the declaration), from life or disability insurance contracts and capitalization operations, except when they must be taxed as employment income.

Completion.

To determine the amount of the total income from these capital gains, the following rules shall apply:

• Deferred capital

When deferred capital is received, the total return will be determined by the difference between the capital received and the amount of the premiums paid.

• Life or temporary annuities

Life annuities or temporary annuities acquired through inheritance, legacy or any other title of succession are not subject to personal income tax.

Temporary and life annuities will be included in the tax base according to the following rules:

• Life annuities
• Temporary income
• Special integration regime
• Redemption of temporary and life annuities
• Total amount of deferred capital corresponding to life insurance policies whose performance is subject to DT4 of the Law.
• Individual savings plans.

Life insurance in which the policyholder assumes the investment risk ("UNIT LINKED").

Life insurance policies in which the policyholder assumes the investment risk (usually called unit linked ) are taxed with certain special conditions.

1. "UNIT LINKED" insurance that meets the requirements of (art.. 14.2 h) of the Law)

   Income derived from life insurance contracts in which the policyholder assumes the investment risk (usually called "unit linked"), is taxed in accordance with the general regime established for life insurance benefits, provided that they meet the requirements set forth in article 14.2.h) of the Tax Law.

2. "UNIT LINKED" insurance that does not meet the requirements of (art.. 14.2 h) of the Law)

   Life insurance contracts in which the policyholder assumes the investment risk that do not meet the requirements set forth in article 14.2.h) of the Tax Law will be taxed as follows:

   1. Annual imputation as income from movable capital

      The difference between the net asset value of the assets affected by the policy at the end and at the beginning of the tax period will be imputed as income from movable capital for each tax period.

   2. Performance derived from the collection of contract amounts

      When the profits derived from these contracts are obtained, they will be taxed as income from movable capital in accordance with the rules provided for life insurance contracts, with the following peculiarity:

      • The amount of imputed income referred to in the previous number will reduce the income derived from these perceptions (art. 14.2.h) Law).

Requirements of article 14.2 h) of the Law.

In order for the income derived from life insurance contracts in which the policyholder assumes the investment risk (usually called "unit linked") to be taxed in accordance with the general regime established for life insurance benefits, one of the following circumstances must occur during the entire term of the contract:

1. The policyholder shall not be given the power to modify the investments affected by the policy; or

2. The mathematical provisions are invested in:

   1. Shares or interests in collective investment institutions, predetermined in the contracts, under the conditions provided for in article 14.2 h) of the Tax Law.

   2. Sets of assets reflected separately in the balance sheet of the insurance entity, provided that the requirements set out in article 14.2 h) of the Tax Law are met.

Conditions of the assets in which the mathematical provisions are invested

Article 14.2 h) of the Tax Law regulates the assets in which the mathematical provisions of unit-linked insurance may be invested and the conditions and requirements that must be met throughout the duration of the contracts:

1. Shares or units of collective investment institutions , predetermined in the contracts, provided that:

   • These are collective investment institutions adapted to the Law on Collective Investment Institutions (Law 35/2003).

   • These are collective investment institutions covered by Directive 2009/65/EC.

2. Set of assets reflected separately in the insurance entity's balance sheet, provided that the following requirements are met:

   • The determination of the assets comprising each of the different sets of separate assets must, at all times, be the responsibility of the insurance entity.

   • The investment of provisions must be made in assets suitable for the investment of technical provisions, as set out in article 50 of the Regulation on the Management and Supervision of Private Insurance, approved by Royal Decree 2486/1998, of 20 November, with the exception of real estate and real estate rights.

   • Investments in each set of assets must comply with the diversification and dispersion limits established, in general, for insurance contracts.

     However, it will be understood that those sets of assets that seek to develop an investment policy characterized by reproducing a certain stock market or fixed-income index representative of one of the official secondary markets of the European Union meet such requirements (art. 16 Law 6/2000).

   • The policyholder will only have the power to choose, among the different separate sets of assets, in which the insurance company should invest the mathematical provision of the insurance, but in no case will he be able to intervene in determining the specific assets in which, within each separate set, such provisions are invested.

1. Life annuities
2. Temporary income
3. Special integration regime
4. Redemption of temporary and life annuities
5. Total amount of deferred capital corresponding to life insurance to whose performance the 4th DT of the Law is applicable
6. Individual systematic savings plans