On April 17th 2018, the Spanish General Tax Office (hereinafter "GTO") issued binding opinion V0993-18 on the subjection of Unit Linked insurances to Wealth Tax (hereinafter the "WT") without any right of redemption. The GTO clarifies therein certain aspects that were controversial until now.
Previously, the GTO had released opinions regarding Unit Linked insurances. Specifically, through its binding opinion V2516-17 (itself referring to an opinion published in 2005), the GTO considered that a Unit Linked life insurance, with temporary survival features and single premium without the possibility of extensions or additional or extraordinary contributions and without redemption value during the life of the insurance, should not be taxable for WT purposes.
Now, the GTO with this new opinion V0993-18 clearly states (in accordance with the provisions of Article 17.1 of Law 19/1991) that all Unit Linked insurances covering survival or death and without the right of redemption are not subject to WT regardless of whether:
- The policyholder is, or is not, the beneficiary in the case of survival;
- There are, or are not, tacit and automatic extensions of the contract; or
- There is the possibility of contributing additional premiums.
Therefore, we consider this opinion helps to clarify the fiscal consequences of Unit Linked insurance contracts, and thereto provides greater legal security for the policyholders.
This alert is not exhaustive and does not cover every single aspect of referred laws. The information provided in this alert should not be construed as legal advice or legal opinion regarding any specific facts or circumstances.
This alert was provided by Anaford Attorneys, who have taken all reasonable care to ensure that the information contained in this alert is accurate at the time of publication.
