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A taxpayer inquired whether they could deduct legal and solicitor fees from compensation received following an out-of-court settlement with a bank. The Directorate General of Taxes (DGT) ruled that the compensation constitutes a capital gain, whereas the fees do not qualify as a deductible capital loss.
This ruling clarifies that legal costs incurred to secure a settlement are not deductible against the resulting capital gain for tax purposes.
The tax team reviews your specific situation.
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