Life insurance contracts in which the policyholder assumes the investment risk

Life insurance policies in which the policyholder assumes the investment risk are subject to certain tax conditions.

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

   The 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 the aforementioned article throughout the duration of the contract.

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

   Life insurance contracts in which the policyholder assumes the investment risk that do not meet the requirements set forth in the aforementioned article will be taxed as follows: 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 capital gains for each tax period. In this case, the imputed amount will reduce the income derived from the receipt of amounts from these contracts.

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 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.

2. The mathematical provisions are invested in:

   a) Shares or units of 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/CEE of the European Parliament and of the Council, of July 13, 2009.

   b) Sets 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 correspond, at all times, to the insurance entity, which, for these purposes, will enjoy full 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 rules established in article 89 of Royal Decree 1060/2015, of November 20, on the regulation, supervision and solvency of insurance and reinsurance entities. In no case may this concern real estate or real estate rights.

   However, those asset groups that seek to develop an investment policy characterised by reproducing a certain stock market or fixed-income index representative of some of the official secondary securities markets of the European Union will be deemed to meet such requirements.

   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.

   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 there being any specific specifications for each policyholder or insured.