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A taxpayer inquired whether they could deduct solicitor and court agent fees from compensation received following a costs order. The Directorate General for Taxes (DGT) ruled that such compensation constitutes a capital gain that cannot be reduced by the procedural costs incurred.
Taxpayers receiving compensation through costs orders must include the full amount as a capital gain, as legal and procedural expenses are not deductible from this specific income.
The tax team reviews your specific situation.
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