Taxation of life insurance savings - InsuranceRise

Tuesday, 6 September 2016

Taxation of life insurance savings



Life insurance savings products are forecast to ensure a guaranteed end capital. At the time of hiring the minimum interest rate that will be in effect throughout the duration of the contract is fixed.

The guaranteed capital is the result of the capitalization of premiums paid by the customer who has subscribed insurance. This client has two options:


  • The first option is to wait for the deadline set when the insurance, then charging the guaranteed benefit.
  • The second option is to rescue prior to such expiration

Taxation of benefits derived such insurance falls within the scope of personal income tax when the policyholder and the beneficiary are the same person, whereas if the policyholder and the beneficiary are different people savings insurance life are subject to inheritance tax ( ISD) us to be premiums have been paid from the community property, which should be explicitly stated in this insurance. In this case the spouse would be taxed 50% in the ISD and 50% in income tax.

Tax personal income tax


In the case of tax on personal income tax, taxation varies depending on the mode of disposal of the insured capital. Although in all cases the returns generated are treated as income from capital, which are integrated into the savings tax base.

Features: Features



  • The premiums paid on life insurance savings are not deductible.
  • The rents are considered derived from the maturity or redemption insurance.
  • Life insurance savings has fiscal performance rating furniture capital.
  • The investment income derived from savings life insurance is subject to 21% and is deductible from income tax share.

Benefits in a lump sum


As regards the taxation of benefits in a lump sum when the insurance benefit in a lump sum (one-time) is perceived are considered capital gains, the difference between the perceived capital and all the premiums paid.

Personal income tax is part of the savings tax base that is taxed in 2014 according to different types, depending on the part of the tax base, and does not vary with respect to 2013.


  • Up to 6,000 euros 21% applies.
  • From 6,001 to 24,000 euros 25% applies.
  • From 24,001 euros 27% applies.

Contracts entered into before 20 January 2006 can be offset by the elimination of tax reductions of 40% to 75% if the performance has generated more than two to five years from the payment of the first premium.

There is a specific transitional arrangements for abatement coefficients on positive returns that proportionally correspond to premiums paid before January 31, 1994 that would have been generated before 20 January 2006. These shall qualify for a reduction of 14.24% for each year exceeding two, including the payment of the premium and the December 21, 1994.

Benefits in the form of annuity

As regards the taxation of benefits in the form of annuity, these are considered investment income in income tax, so that the yield obtained is part of the savings tax base that is taxed at the corresponding rate between 21 % -27%.

To this we must first apply a scale of percentages by age integration by becoming rentier income, which remain constant throughout its duration. These scales are:


  • When the recipient is less than 40 years: 40%
  • When the recipient is between 40 and 49 years: 35%
  • When the recipient is between 50 and 59: 28%
  • When the recipient is between 60 and 65: 25%
  • When the recipient is between 66 and 69: 20%
  • When the recipient has 70 years or more: 8%

In any case, the benefits are subject to a withholding tax of 21%


Taxation by ISD


Taxation by ISD (inheritance tax) occurs when the contractor and the recipient are different people. In this case, the beneficiary receives benefits accrue to all other amounts making up their share of the inheritance.

To determine the amount to be charged on the basis
Taxable must distinguish whether it is an income or a perception in the form
capital:


  • In the case of a single perception in a lump sum the amount charged in the taxable amount shall be charged.
  • When perception is an income insurance must include the actuarial present value of the same in the tax base.

In addition to the overall reductions by kinship, the legislation provides
specific reduction of 100% with a limit of 9,195.49 euros, which is applicable to
amounts received by the beneficiaries of contracts of life insurance,
when your relationship to the deceased contractor is the spouse, parent,
descendant, adopter or adopted. This reduction will be unique by the taxpayer,
whatever the number of life insurance contracts for which it is
beneficiary.

In the case of beneficiaries received by survival or death of the insured person that is different contractor performance it will be taxed in the ISD as a legal business Free and inter title comparable to living donation.
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