General scheme
Regulations: Articles 25.3 a) 4 Law IRPF (first paragraph) and 18 Regulation IRPF
When deferred, life-long or temporary income is received, which has not been acquired by inheritance, legacy or any other succession title, the return on movable capital will be the result of applying to each annuity the corresponding percentage of those provided for immediate, life-long or temporary income.
These percentages analyzed in the previous section (immediate, life or temporary income insurance) are the following:
1. Immediate life annuities:
| Age of the recipient | Applicable percentage |
|---|---|
| Under 40 years old | 40 percent |
| Between 40 and 49 years old | 35 percent |
| Between 50 and 59 years old | 28 per 100 |
| Between 60 and 65 years old | 24 per 100 |
| Between 66 and 69 years old | 20 per 100 |
| 70 years or older | 8 per 100 |
These percentages will correspond to the age of the annuitant at the time of establishing the annuity and will remain constant throughout its validity.
2. Immediate temporary income:
| Duration of the rental | Applicable percentage |
|---|---|
| Less than or equal to 5 years | 12 per 100 |
| Greater than 5 and less than or equal to 10 years | 16 per 100 |
| Greater than 10 and less than or equal to 15 years | 20 per 100 |
| Over 15 years | 25 percent |
The result obtained will be increased by in the profitability obtained until the income is established, the determination of which will be given by the difference between the current actuarial financial value of the income that is established and the amount of the premiums paid. This profitability will be distributed linearly during the first 10 years of collection of said income if it is for life or between the years of duration of the same, with a maximum of 10 years, if the income is temporary (Art. 18 Regulation IRPF ). The following formula can be used to determine it:
(VA - PS) ÷ No. of years
Being:
- "VA" is the actuarial present financial value of the income being established.
- "PS" the amount of premiums paid.
- "Nº years" is the number of years that the temporary income will last, with a maximum of 10 years. If the annuity is for life, 10 years will be taken as a divisor.
Exception: When the income has been acquired by donation or any other legal transaction free of charge and inter vivos , the return on movable capital will be, exclusively, the result of applying to each annuity the percentage that corresponds to those provided for immediate life or temporary annuities, since the creation of the income was taxed in the Inheritance and Gift Tax.
The portion of income that is considered income from movable capital, by applying the corresponding percentage, will be subject to withholding tax.
Remember: Life or disability insurance policies that provide benefits in the form of capital and said capital is intended to create life annuities or temporary annuities, provided that this possibility of conversion is included in the insurance contract, will be taxed at the time of creation of the annuities in accordance with the provisions of this section. In no case will this tax regime apply when the capital is made available to the taxpayer by any means.
Example:
Mr. GAM signed a deferred annuity life insurance policy on January 3, 2013, paying an annual premium of 6,000 euros payable on January 5 of each of the years 2013 to 2022, both inclusive.
On October 23, 2022, coinciding with his 68th birthday, he began receiving a life annuity of 10,000 euros per year.
Determine the net return on movable capital knowing that, according to the certification of the insurance company's actuary, the current actuarial financial value of the life annuity to be collected amounts to 70,000 euros.
Solution:
The net return on movable capital will be given by the sum of:
Percentage applicable to the annuity: 20 per 100 s/10,000 = 2,000
Profitability until the creation of income: (70,000 – 60,000) ÷ 10 (*) = 1,000
Return on capital assets: 2,000 + 1,000 = 3,000
Note to example:
(*) The return obtained until the income is established, the difference between the current actuarial financial value of the income being established (70,000 euros) and the amount of the premiums paid (6,000 x 10 = 60,000), is distributed linearly over the first ten years of collection of the income, so that from the eleventh year onwards the return on movable capital will consist exclusively of 2,000 euros, since the applicable percentage based on the age of the annuitant at the time of the income being established (68 years) remains constant throughout the term of the income. (Back)