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V0128-17 ·23 January 2017 ·consulta-vinculante Medium impact
Tax

Personal injury compensation is exempt, while property damage and default interest are taxable

A query was raised regarding whether compensation for a road traffic accident and its accrued interest are exempt from Personal Income Tax (IRPF). The Directorate General for Taxes (DGT) has determined that only personal injury is exempt, whereas property damage and default interest are taxable as capital gains.

In 6 key points

How it affects those involved

Taxpayers receiving compensation for accidents must distinguish between personal and material damages, as the latter and any associated interest will trigger a capital gains tax liability.

Lifecycle

2017-01-23PublishedPublished 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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