Insurance contracts linked to investment funds are commonly known as unit-linked.
It is a life insurance contract, the balance of which is expressed in units of account, which are autonomous funds constituted by the assets of the insurer or by units of participation in one or more investment funds, and the profitability of which depends on the evolution of the value of these assets.
Capital income is that which results from the repayment or redemption of such insurance. In other words, the positive difference between the amounts paid as redemption, advance or maturity of life insurance and operations and the corresponding premiums paid or amounts invested is taxable.
This income is subject to a withholding tax at an IRS rate of 28% (or 22,4%, if the taxpayer is resident in the Autonomous Region of the Azores).
However, the percentage of income that is subject to tax depends on the duration of the contract. Thus, if the amount of premiums paid in the first half of the contract doesn’t represent, at least, 35% of the total premiums, 100% of the income will be subject to the said withholding. On the other hand, if this amount represents at least 35% of the total premiums:
