TAX REGULATION OF SYSTEMATIC INDIVIDUAL SAVINGS PLANS

General provisions relating to the Tax Environment in the Community of Navarra

The new rules create systematic individual savings plans, which are configured as contracts arranged with insurance entities in order to provide an insured annuity yield with the payments made, provided that they comply with the following requirements:

• The resources provided shall be made by means of individual life assurances in which the contracting party, the assured and the beneficiary shall be the contributor himself.
• The maximum annual limit paid in as premium under this type of contract shall be 8.000 euros, and shall be independent of the limits for payments into the social security system. Furthermore, the total amount of premium accumulated in these contracts may not exceed the combined total of 240,000 euros per contributor.
• The first premium must have been made at least 10 years earlier, at the moment of constituting the annuity income.

Taxation of benefits

The annuity income payable shall be taxable as an immediate annuity income.

Being an immediate annuity income subject to tax, the amount of yield shall be considered by applying to each year the following percentages:

• 40 per cent, when the recipient is less than 40 years of age.
• 35 per cent, when the recipient is aged between 40 and 49 years.
• 28 per cent, when the recipient is aged between 50 and 59 years.
• 24 per cent, when the recipient is aged between 60 and 65 years.
• 20 per cent, when the recipient is aged between 66 and 69 years.
• 8 per cent, when the recipient is more than 70 years of age.

These percentages shall be those corresponding to the age of the recipient at the time of establishing the annuity and shall remain constant during the full term.

Income from capital derived from benefits under life or disability insurances, are subject to retention on account of IRPF at a fixed rate of 18 per cent.

Equally, the income which can be shown at the moment of constituting the insured annuity income resulting from these systematic individual savings plans, shall be exempt from tax.

In the event of disposal, partial or total, by the contributor prior to constituting the annuity, of the accumulated economic rights, it shall be taxable in accordance with the provisions of the law in proportion to the disposal made. For this purpose, it will be presumed that the amount recovered corresponds to the earliest premiums paid, including the profitability accrued thereon.

In the event of an advance, either total o partial, of the economic rights derived from the annuity income constituted, the contributor must integrate within the taxation period during which the advance is made, the income which was exempt.

THIS TYPE OF INSURANCE SHALL BE SUBJECT TO THE TAX BENEFITS THAT THE LAW DETERMINES AT ALL TIMES.