8.4.2.5. Dependency insurance

1. Private Dependency Insurance

   The tax base may be reduced by premiums paid for private insurance that exclusively covers the risk of severe or great dependency in accordance with the provisions of the Law on the Promotion of Personal Autonomy and Care for People in Situations of Dependency.

   Likewise, persons who have a direct or collateral relationship with the taxpayer up to the third degree inclusive, or through their spouse, or through those persons who have the taxpayer in their care under a guardianship or foster care regime, may reduce the premiums paid to these private insurance policies in their tax base, taking into account the reduction limit provided for in the Law.

   The total amount of reductions made by all persons who pay premiums in favour of the same taxpayer, including those of the taxpayer himself, may not exceed 2,000 euros per year.

   The insurance contract must meet the following requirements:

   1. The taxpayer must be the policyholder, insured and beneficiary. However, in the event of death, the right to benefits may be generated under the terms provided for in Legislative Royal Decree 1/2002, which approves the Revised Text of the Law on the Regulation of Pension Plans and Funds.

   2. These insurance contracts must necessarily offer an interest guarantee and use actuarial techniques.

2. Collective insurance.

   With effect from 1 January 2013, pension commitments made by companies, including accrued benefits, may be implemented through collective dependency insurance contracts, in which the policyholder will be the company alone and the insured and beneficiary will be the worker. The premiums paid by the company under these insurance contracts and charged to the employee will have an independent reduction limit of 5,000 euros per year.

   These premiums will not be subject to Inheritance and Gift Tax.