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V0062-18 ·17 January 2018 ·consulta-vinculante Medium impact
Tax

Payment of legal costs is not subject to VAT as it is compensatory in nature

A requesting entity asks whether the payment of legal costs for the winning party's legal fees is subject to VAT. The DGT rules that this payment constitutes compensation rather than consideration for a service, and therefore no VAT is applicable.

In 6 key points

How it affects those involved

This ruling clarifies that legal cost awards are indemnities for damages rather than taxable services, ensuring no VAT is charged on such payments.

Lifecycle

2018-01-17PublishedPublished in the BOE
Official text Based on BOE data (boe.es). Information, not advice.

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This analysis is informational only and does not constitute legal advice or create a client-adviser relationship. BM Consulting.
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