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Practical manual for Income Tax 2019.

Introduction

Regulations: Art. 25.3 Law Income Tax

The income, whether monetary or in kind, from capitalization operations and life or disability insurance contracts generates income from movable capital subject to Personal Income Tax , provided that the contractor and beneficiary are the same person (since otherwise, said income would be taxed by the Inheritance and Gift Tax), with the exception of disability insurance whose beneficiary is the mortgage creditor , and except when they must be taxed as income from work .

Regulations: Art. 17.2 a) Law Income Tax .

Please note that ## the benefits derived from the following insurance contracts entered into within the framework of social security are taxed as employment income:

  • Insurance contracts entered into with social security mutual societies whose contributions may have been, at least in part, deductible expenses or subject to reduction in the tax base.
  • Company social security plans, as well as collective insurance that implement the pension commitments assumed by companies, in the terms provided for in the First Additional Provision of the consolidated text of the Law on the Regulation of Pension Plans and Funds, approved by Royal Legislative Decree 1/2002, of November 29 ( BOE of December 13).
  • Insured pension plans.
  • Dependency insurance in accordance with the provisions of Law 39/2006, of December 14, on the Promotion of Personal Autonomy and Care for People in Situations of Dependency ( BOE of 15).

For the purposes of taxing capital gains from capitalisation transactions and life or disability insurance contracts, the Tax Law establishes distinctions based on the form of receipt of benefits (income or capital), the term of the transactions and the coverage of contingencies, such as retirement or disability.

This type of transaction is considered to be one that, based on actuarial techniques, consists of obtaining commitments determined in terms of duration and amount in exchange for previously established single or periodic disbursements. See the Annex of Law 20/2015, of July 14, on the regulation, supervision and solvency of insurance and reinsurance entities, ( BOE of July 15), section B).b).2.