A 2002 ruling states it clearly: where an insurance company is offering life insurance in Spain, the beneficiary of the policy is to pay taxes in Spain, whether his status is one of residency or non-residency.
According to the ruling:
Where the policy holder and the beneficiary of the policy are different persons, any payments made under the policy will pay Spanish IHT, irrespective of whether the beneficiary is a tax resident in Spain, or not, pursuant to the provision of Act 29/1987 of the 18th of December and the Royal Decree 1629/1991, of the 8th of November, which approves the Inheritance Tax Regulation.
Of course, it was not in the interest of Lex Life, Nordea Life and Pensions, Jyske Bank etc. to tell people the truth, was it?
How best to further your business in this country by cheating foreign property owners, hey?
At least, you did study carefully and took into account the legendary Spanish laid-backness, we’ll give you that, but for sure, this scam will soon be properly picked up…!