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Practical Guide to Income Tax 2019.

Provision of economic rights and taxation of the insured annuity

Provision of economic rights

In the event of total or partial disposal by the taxpayer before the constitution of the life annuity of the accumulated economic rights, it will be taxed in accordance with the provisions of the Law of PIT in proportion to the provision made. For these purposes, the amount recovered shall be deemed to correspond to the premiums paid in the first place, including their corresponding profitability.

The policyholders of individual systematic savings plans may, by unilateral decision, transfer their mathematical provision to another individual systematic savings plan of which they are policyholders. The total or partial transfer of a systematic savings plan to another will follow, as far as applicable, the procedure relating to insured pension plans (Additional Provision Five of the Personal Income Tax Regulations).

In the event of advance payment, in whole or in part, of the economic rights derived from the established life annuity, the taxpayer must integrate into the tax period in which the advance payment occurs, the income that was exempt by application of the provisions of letter v) of article 7 of the Personal Income Tax Law.

Taxation of insured life annuities

  1. The profitability that is demonstrated in the constitution of the insured life annuity (difference between the current actuarial value of the annuity and the sum of the premiums paid) is exempt from personal income tax , in accordance with the provisions of article 7.v) of the Personal Income Tax Law.
  2. The life annuity received will be taxed in accordance with the percentages established for immediate life annuities included in this same Chapter.