Skip to main content
Practical Income Manual 2021.


Regulations: Art. 25.3 Law Personal Income Tax

Income, in cash or in kind, from capitalization operations and life or disability insurance contracts generate income from movable capital subject to Personal Income Tax , provided that the contracting party and beneficiary coincide in the same person, except in the case of disability insurance whose beneficiary is the mortgage creditor in which the income will have the same tax treatment that would have corresponded if the beneficiary had been the taxpayer himself.

Otherwise (that is, when the contracting party and beneficiary do not coincide) the collection will normally be taxed in the Inheritance and Donation Tax.

Capitalization operations and life or disability insurance contracts are exempt from this classification as income from movable capital when, in accordance with article 17.2.a) of the Personal Income Tax Law , must be taxed as income from work .

Benefits from insurance contracts that are taxed as employment income

Regulations: Art. 17.2 a) Law Personal Income Tax .

The benefits derived from the following insurance contracts concluded within the framework of social security are taxed as income from work :

  • Insurance contracts concluded with social security mutual societies whose contributions may have been, at least in part, a deductible expense or subject to a reduction in the tax base.
  • Corporate 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 a Situation of Dependency ( BOE of 15).

As we will see throughout this section, for the purposes of taxing income from capital from capitalization operations and life or disability insurance contracts, the Personal Income Tax Law establishes distinctions based on the way benefits are received (income or capital), the term of the operations and the coverage of contingencies, such as retirement or disability.

Capitalization operations are considered to be those based on actuarial technique, which consist of obtaining commitments determined in terms of their duration and amount in exchange for previously established single or periodic disbursements. See the Annex to Law 20/2015, of July 14, on the organization, supervision and solvency of insurance and reinsurance entities, ( BOE of July 15), section B). b).2.

The life insurance contract is the contract in which the insurer undertakes, through the collection of the stipulated premium and within the limits established in the Law and in the contract, to satisfy the beneficiary with capital, an income or other benefits. agreed upon, in the event of death or survival of the insured, or both events together. Life insurance can be stipulated on one's own life or that of a third party, both in case of death and in case of survival or both together, as well as on one or more heads (article 93 Law 50/1980, of October 8 , Insurance Contract).