7.3.3.6. Income derived from life or disability insurance contracts and capitalization operations

This section will include monetary or in-kind returns, as well as their corresponding withholdings or payments on account (which the program transfers to box 0559 on page 17 of the declaration), from of life or disability insurance contracts and capitalization operations, except when they must be taxed as income from work.

To determine the amount of the full income from these returns on movable capital, the following rules will be applied:

DEFERRED CAPITAL

When deferred capital is received, the full return will be determined by the difference between the capital received and the amount of premiums paid.

LIFE OR TEMPORARY ANNUMS

Life or temporary annuities that have been acquired by inheritance, legacy or any other succession title are not taxed in personal income tax.

Temporary and life annuities will be integrated into the tax base in accordance with the following rules:

LIFE INSURANCE IN WHICH THE POLICYHOLDER ASSUMS THE RISK OF THE INVESTMENT (“UNIT LINKED”).

Life insurance in which the policyholder assumes the risk of the investment (usually called “unit linked” ), are taxed with certain specialties.

“UNIT LINKED” INSURANCE THAT MEETS THE REQUIREMENTS OF ART. 14.2 h) LAW

Income derived from life insurance contracts in which the policyholder assumes the investment risk (usually called "unit linked"), are taxed in accordance with the general regime established for life insurance receipts, provided they comply with the requirements provided for in article 14.2.h) of the Tax Law.
“UNIT LINKED” INSURANCE THAT DOES NOT MEET THE REQUIREMENTS OF ART. 14.2 h) LAW

Life insurance contracts in which the policyholder assumes the risk of the investment that do not meet the requirements set forth in article 14.2.h) of the Tax Law will be taxed as follows :
1. Annual allocation as return on movable capital
  
  The difference between the net asset value of the assets assigned to the policy at the end and at the beginning of the tax period will be allocated as income from movable capital for each tax period.
2. Performance derived from the receipt of contract amounts
  
  When the earnings derived from these contracts are obtained, they will be taxed as capital gains in accordance with the rules established for life insurance contracts, with the following peculiarity:
  - The amount of imputed income referred to in the previous number will reduce the performance derived from these perceptions (art. 14.2.h) Law).

REQUIREMENTS OF ART. 14.2 h) LAW: “UNIT LINKED” INSURANCE.

In order for the returns derived from life insurance contracts in which the policyholder assumes the investment risk (usually called "unit linked"), to be taxed in accordance with the general regime established for life insurance receipts, there must be , during the entire term of the contract, any of the following circumstances:

The policyholder is not granted the power to modify the investments affected by the policy; or
The mathematical provisions are invested in:
1. Shares or participations in collective investment institutions, predetermined in the contracts, under the conditions provided for in article 14.2 h) of the Tax Law.
2. Sets of assets reflected separately in the balance sheet of the insurance entity, provided that the requirements set forth in article 14.2 h) of the Tax Law are met.

CONDITIONS OF THE ASSETS IN WHICH THE MATHEMATICAL PROVISIONS ARE INVESTED (art. 14.2 h) Law)

Article 14.2 h) of the Tax Law regulates the assets in which the mathematical provisions of “unit linked” insurance can be invested and the conditions and requirements that must be met throughout the term of the contracts:

SHARES OR PARTICIPATIONS OF COLLECTIVE INVESTMENT INSTITUTIONS , predetermined in the contracts, provided that:
- These are collective investment institutions adapted to the Law on Collective Investment Institutions (Law 35/2003).
- These are collective investment institutions covered by Directive 2009/65/EC.
SET OF ASSETS reflected separately in the balance sheet of the insurance entity, provided that the following requirements are met:
- The determination of the assets that make up each of the different sets of separate assets must correspond, at all times, to the insurance entity.
- The investment of the provisions must be made in the assets suitable for the investment of the technical provisions, included in article 50 of the Regulations for the Management and Supervision of Private Insurance, approved by Royal Decree 2486/1998, of November 20, with exception of real estate and real estate rights.
- The investments of each set of assets must comply with the diversification and dispersion limits established, in general, for insurance contracts.
  
  However, it will be understood that these requirements are met by those sets of assets that attempt to develop an investment policy characterized by reproducing a certain stock or fixed income index representative of one of the official secondary markets of the European Union (art. 16 Law 6 /2000).
- The policyholder will only have the power to choose, among the different separate sets of assets, in which the insurance entity should invest the mathematical provision of the insurance, but in no case will he be able to intervene in the determination of the specific assets in which, within each separate set, such provisions are reversed.