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Where do I collect and pay taxes when it comes to collecting life insurance?

The payment of taxes derived from the collection of life insurance is an essential aspect when receiving the capital stipulated in the policy if the insured person dies. The reason is very simple. No insurance can be collected if the payment of the Inheritance Tax is not justified, the tax that is subject to the beneficiaries when they receive the capital of life insurance. Of course, the autonomous communities, which are the ones that collect this tax, in order to expedite the collection of insurance, usually allow to submit a self-assessment only for the amount of insurance before the full liquidation of the goods you receive.

Subsequently, and within the period of six months for the presentation of the tax or the corresponding term if an extension had been granted, the interested parties will have to liquidate the rest of the goods that they receive in inheritance. Of course, in the said settlement you must report the previous self-assessment and include the insurance and the amounts that you have already paid.

Where do I submit my statement?


This gives us a first question. Where do we have to pay taxes? In many cases the insured / policyholder has been able to reside in a different autonomous community than the insured. In these cases the regulations are clear. The beneficiaries of life insurance that charge for the insured’s death will be taxed by the Inheritance Tax in the autonomous community where the latter lived.

This fact can have important fiscal implications since the Tax of Inheritance is applied to tax benefits that reduce the amount to be paid up to 99% but with important differences.

Differences to consider


The collection of life insurance has an advantage over other assets that are received in inheritance since a 100% reduction, with a limit of 9,195.49 euros, will be applied to the amounts received by the beneficiaries of insurance contracts about life, when your relationship with the deceased contractor is a spouse, ascendant, descendant, adopter or adopted.

To this reduction it is necessary to apply those that correspond to the autonomous communities. The bonuses applied by the autonomous communities are increasing, but the differences are not only in the percentage of the application, but also in the degree of kinship to which they apply.

Paying the capital you receive for life insurance

Paying the capital you receive for life insurance

Thus, among the legislative changes of 2019, Madrid that applies a 99.9% reduction in cases of direct heirs, has begun to allocate a 15% bonus for brothers and another 10% to uncles and nephews. Aragon has increased the reduction of group II to 500,000 euros and a reduction of 15,000 euros to siblings of the deceased, as well as a 65% bonus on the purchase of the deceased’s home. Good Finance extends the bonus to group I and II to 100%, extends to heirs of group III to 99.9%. On the opposite side maintain the highest fees, even for first-degree relatives. You must have all these differences when it comes to managing and paying the capital you receive for life insurance.

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