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A taxpayer queried whether interest received from the refund of undue tax payments constitutes a capital gain and whether loan expenses and legal fees are deductible. The Directorate General for Taxes (DGT) ruled that such interest is classified as a capital gain and that these expenses are not deductible.
Taxpayers receiving interest due to tax refunds must report this amount as a capital gain in their Personal Income Tax (IRPF) returns, and they cannot offset associated costs such as legal fees or loan interest.
The tax team reviews your specific situation.
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