Instrumentation and form of perception of benefits

Instrumentation

The resources contributed must be implemented through individual life insurance in which the contracting party, insured and beneficiary is the taxpayer himself.

Life insurance policies suitable for this contractual formula will not be collective insurance policies that implement pension commitments in accordance with the First Additional Provision of the consolidated text of the Law on Regulation of Pension Plans and Funds, nor social security instruments that reduce the taxable base of IRPF .

The contract terms and conditions will expressly and prominently state that this is a systematic individual savings plan and its acronym is reserved for contracts that meet the requirements set forth in the Personal Income Tax Law.

Form of perception of benefits

The life annuity will be constituted with the economic rights arising from said life insurance policies. In life annuity contracts, reversal mechanisms or certain benefit periods or counter-insurance formulas may be established in the event of death once the life annuity has been established.

The reversal mechanism in insurance contracts is the procedure by which the insured (who, in the case of PIAS , is the first beneficiary) can transfer, after his death, all or part of the life annuity to a new beneficiary.

Life annuity insurance contracts with certain benefit periods are those in which it is guaranteed that the income will be received for a minimum number of years even if the insured and initial beneficiary of the income dies (logically, in the event of the death of the insured, the income will be received by the beneficiary designated for that purpose).

Finally, the counterinsurance formulas (the most used in insurance practice) are those that guarantee the designated beneficiary a capital amount in the event of the death of the insured.

However, in order to ensure that the application of the exemption provided for in article 7.v) of the Personal Income Tax Law complies with the intended purpose, contracts entered into after April 1, 2019 in which reversal mechanisms, certain benefit periods or counter-insurance formulas in the event of death are established, must comply with the following requirements (Additional Provision nine of the Personal Income Tax Regulations):

1. In the case of reversal mechanisms in the event of the death of the insured, there may only be one potential beneficiary of the life annuity who reverts .

2. In the case of certain benefit periods, said periods may not exceed 10 years from the establishment of the life annuity.

3. In the case of counter-insurance formulas, the total amount to be received on the occasion of the death of the insured may at no time exceed the following percentages with respect to the amount allocated to the creation of the life annuity:

   Years since the establishment of the life annuity	Percentage
   1st	95 percent
   2nd	90 percent
   3rd	85 percent
   4th	80 percent
   5th	75 percent
   6th	70 percent
   7th	65 percent
   8th	60 percent
   9th	55 percent
   10th and above	50 percent

Important : The requirements established for cases in which there are reversal mechanisms, certain benefit periods or counter-insurance formulas in the event of death on insured life annuity contracts will not apply to life insurance contracts entered into prior to April 1, 2019, regardless of whether the life annuity is established after that date.