7,2,3,6. Income derived from life or disability insurance contracts and capitalisation transactions

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

Completion.

The following rules shall be applied to determine the total income of these movable capital gains:

• Deferred capital

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

• Life or temporary annuities

Life or temporary income that has been acquired by inheritance, legacy or any other inheritance is not taxed in the Personal Income Tax.

Temporary and life annuities will be included in the taxable income in accordance with the following rules:

• Life annuities
• Temporary annuities
• Special integration regime
• Redemption of temporary and life annuities
• Total amount of deferred capital corresponding to life insurance in the case of income tax applicable to D.T.4ª of the Act.
• Individual systematic savings plans.

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

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

1. "UNIT LINKED" insurance policies that meet the requirements of (art. 14,2 Hours) of the Act)

   Income derived from life insurance contracts in which the policyholder assumes the risk of the investment (usually referred to as "unit linked") "), are taxed in accordance with the general regime established for the payment of life insurance, provided that they meet the requirements set out in article 14.2.h) of the Tax Act.

2. "UNIT LINKED" insurance policies that do not meet the requirements of (art. 14,2 Hours) of the Act)

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

   1. Annual allocation as capital gains

      The difference between the net asset value of the assets assigned to the policy at the end and beginning of the tax period will be attributed as the return on movable capital of each tax period.

   2. Return derived from the receipt of contract amounts

      When the payments derived from these contracts are obtained, they will be taxed as income from movable capital in accordance with the rules established for life insurance contracts, with the following special feature:

      • The amount of the income attributed to which reference has been made in the previous issue will reduce the yield derived from these payments (article 14.2.h) Act).

Requirements of article 14,2 (h) of the Act.

So that the returns derived from life insurance contracts in which the policyholder assumes the risk of the investment (usually referred to as "unit") linked "), pay taxes in accordance with the general regime established for the payment of life insurance, one of the following circumstances must occur throughout the term of the contract:

1. The policyholder is not granted the right to modify the investments related to the policy; or

2. Mathematical provisions are invested in:

   1. Shares or holdings of collective investment institutions, predetermined in contracts, under the conditions provided for in article 14,2 (h) of the Tax Act.

   2. Sets of assets reflected separately in the balance sheet of the insurance company, provided that the requirements set out in article 14,2 h) of the Tax Act are met.

Conditions of the assets in which mathematical provisions are invested

Article 14,2 (h) of the Tax Act governs the assets in which the mathematical provisions of the "unit linked" insurance can be invested and the conditions and requirements that must be met throughout the term of the contracts:

1. Actions or participations of collective investment institutions, predetermined in contracts, provided that:

   • These are collective investment institutions adapted to the collective investment institutions Act (Act 35/2003).

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

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

   • The determination of the assets that comprise each of the different sets of separate assets must correspond at all times to the insurance company.

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

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

     However, it will be understood that those asset sets that seek to develop an investment policy characterized by reproducing a certain stock market index or representative fixed-income of one of the official secondary markets of the European Union (article 16 of Act 6/2000) are met.

   • The policyholder will only have the right to choose, among the different sets of assets, in which the insurance company must invest the mathematical provision of the insurance, but under no circumstances may it intervene in determining the specific assets in which, within each separate set, such provisions are invested.

1. Life annuities
2. Temporary annuities
3. Special integration regime
4. Redemption of temporary and life annuities
5. Total amount of deferred capital corresponding to life insurance to which the yield applicable to Mr. T. of the Act
6. Individual systematic savings plans