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Practical Income Manual 2019.

Immediate, lifetime or temporary income insurance

  • Immediate annuity insurance

    Regulations: Art. 25.3 a) 2 Law Personal Income Tax

    In the case of immediate annuities, which have not been acquired by inheritance, legacy or any other succession title, the result of applying the following percentages to each annuity will be considered a return on movable capital:

    • 40 per 100 , when the recipient is under 40 years old.
    • 35 per 100 , when the recipient is between 40 and 49 years old.
    • 28 per 100 , when the recipient is between 50 and 59 years old.
    • 24 per 100 , when the recipient is between 60 and 65 years old.
    • 20 per 100 , when the recipient is between 66 and 69 years old.
    • 8 per 100 , when the recipient is 70 years old or older.

    These percentages will be those corresponding to the age of the annuitant at the time of the constitution of the annuity and will remain constant throughout its validity. The part of the income that is considered a return on movable capital, by application of the corresponding percentage, has been subject in 2019 to the withholding rate of 19 percent.

    Note: It is understood that the income has been acquired by inheritance, legacy or any other succession title, when their acquisition has been motivated by the death of the contracting party, if the insurance is individual, or of the insured if the insurance is collective contracted by the company. company.

    This same tax regime will be applicable to life annuities received from individual systematic savings plans that meet the requirements established in the third Additional Provision of the Personal Income Tax Law, even in the cases in which the aforementioned individual systematic savings plans are the result of the transformation of certain life insurance contracts formalized prior to January 1, 2007 in which the contracting party, insured or beneficiary is the taxpayer himself.

    See the fourteenth transitional provision of the Personal Income Tax Law regarding the transformation of certain life insurance contracts into individual systematic savings plans. See also the fifth Additional Provision of the Personal Income Tax Regulations regarding total or partial mobilization between individual systematic savings plans.

  • Immediate temporary income insurance

    Regulations: Art. 25.3 a) 3 Law Personal Income Tax

    In the case of immediate temporary income, which has not been acquired by inheritance, legacy or any other succession title, in the terms discussed in the previous section, the result of applying the following percentages to each annuity will be considered a return on movable capital:

    • 12 per 100 , when the income has a duration of less than or equal to 5 years.
    • 16 per 100 , when the income has a duration greater than 5 and less than or equal to 10 years.
    • 20 per 100 , when the income has a duration greater than 10 and less than or equal to 15 years.
    • 25 per 100 , when the income has a duration of more than 15 years.

    The part of the income that is considered income from movable capital, by application of the corresponding percentage, will be subject to withholding on account.