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Practical manual for Income Tax 2021.

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

Regulations: Art. 25.3 a) 5 Law 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 paid up to the time of redemption

(-) Satisfied premiums

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

(-) Accumulated profitability until the creation of income (*)

(=) Return on movable capital

(*) Only in cases where the income has been acquired by donation or any other legal transaction free of charge and inter vivos and when it concerns income whose creation occurred prior to the entry into force of Law 40/1998, of December 9, on Personal Income Tax (January 1, 1999) for the profitability that was already taxed previously.(Back)

When the termination of the income occurs as a result of the death of the recipient, no capital gains are generated for the recipient.

Benefits received in the form of an income upon the death of the beneficiary are subject to Inheritance and Gift Tax, and are therefore not subject to Income Tax.