Skip to main content
Practical Guide to Income Tax 2019.

Transitional regime applicable to life and temporary annuities received as of January 1, 2007

Regulations: Fifth Transitional Provision of the Law PIT

In accordance with the provisions of the fifth transitional provision of the Personal Income Tax Law, the transitional regime applicable to life and temporary annuities, immediate or deferred, received from 1 January 2007 distinguishes between:

  1. Income created prior to January 1, 1999.

    The determination of the portion of the income that is considered income from movable capital will be carried out by applying exclusively to the corresponding annuity the percentages provided for in the "Income insurance" section, depending on whether the annuities are life or temporary, respectively.

    These percentages will be applicable depending on the age of the recipient at the time the annuity was established in the case of life annuities or depending on the total duration of the annuity in the case of temporary annuities.

    In the redemption of life or temporary annuities, to calculate the return on movable capital produced due to the redemption, the profitability obtained up to the date of creation of the annuity will be subtracted. The determination of this last amount will be made in accordance with the comments made in section 4 above of the section "Income insurance".

  2. Income generated between January 1, 1999 and December 31, 2006.

    The determination of the portion of the income that is considered capital gains will be carried out by applying the indicated percentages to the annuity, depending on whether it is a life annuity or a temporary annuity, respectively.

    These percentages will be applicable depending on the age of the recipient at the time the annuity was established in the case of life annuities or depending on the total duration of the annuity in the case of temporary annuities.

    Additionally, where applicable, the profitability obtained up to the date of creation of the income will be added. The determination of this last amount will be made in accordance with what is discussed for deferred, life-long or temporary income insurance, in the section "Income insurance".