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Practical Income Manual 2021.

c) Extinction of temporary or life annuities in the exercise of the right of redemption

Regulations: Art. 25.3 a) 5 Law Personal Income Tax

The return on movable capital in these cases, provided that the income has not been acquired by inheritance, legacy or any other succession title, will be the result of the following operation:

(+) Ransom amount

(+) Income satisfied until the moment of rescue

(-) Premiums satisfied

(-) Amounts that have been taxed as income from movable capital, in accordance with what is indicated in the previous numbers

(-) Accumulated profitability until the income is established (*)

(=) Return on movable capital

(*) Only in cases in which the income has been acquired by donation or any other legal transaction free of charge and inter vivos and in the case of income whose constitution had occurred prior to the entry into force of Law 40/1998, of December 9, personal income tax (January 1, 1999) for the profitability that was already taxed previously.(Back)

When the extinction of the income occurs as a consequence of the death of the recipient, no income is generated from the movable capital for the recipient.

Benefits received in the form of income due to the death of the beneficiary are subject to the Inheritance and Donation Tax, which is why they are not taxed in the Income Tax.