Life insurance contracts in which the policyholder assumes the investment risk

Life insurance in which the policyholder assumes the risk of the investment is taxed with certain specialties.

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"), are taxed in accordance with the general regime established for life insurance receipts, provided they comply with the requirements provided for in article 14.2.h) of the Tax Law throughout the term of the contract.

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

   1. Annual allocation as return on movable capital

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

   2. Performance derived from the receipt of contract amounts

      When the earnings derived from these contracts are obtained, they will be taxed as capital gains in accordance with the rules established for life insurance contracts, with the following peculiarity:

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

Requirements of article 14.2 h) of the Law

In order for the returns derived from life insurance contracts in which the policyholder assumes the risk of the investment to be taxed in accordance with the general regime established for life insurance receipts, there must be, during the entire term of the contract, some of the following circumstances:

1. The policyholder is not granted the power to modify the investments affected by the policy.

2. The mathematical provisions are invested in:

   a) Shares or participations in collective investment institutions, predetermined in the contracts, provided that they are collective investment institutions adapted to Law 35/2003, of November 4, on collective investment institutions, or covered by Directive 2009 /65/EEC of the European Parliament and of the Council, of July 13, 2009.

   b) Sets of assets reflected separately in the balance sheet of the insurance entity, provided that the following requirements are met:

   The determination of the assets that make up each of the different sets of separate assets must correspond, at all times, to the insurance entity who, for these purposes, will have complete freedom to choose the assets subject only to predetermined general criteria. relating to the risk profile of the set of assets or other objective circumstances.

   The investment of the provisions of each set of assets must be made in assets that comply with the standards established in article 89 of Royal Decree 1060/2015, of November 20, on the organization, supervision and solvency of insurance and reinsurance entities. In no case may it be real estate or real estate rights.

   However, it will be understood that these requirements are met by those sets of assets that attempt to develop an investment policy characterized by reproducing a certain stock or fixed income index representative of some of the official secondary securities markets of the European Union.

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

   In these contracts, the policyholder or the insured may choose, in accordance with the specifications of the policy, between the different collective investment institutions or separate sets of assets, expressly designated in the contracts, without singular specifications being produced for each policyholder or insured.