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A taxpayer inquired whether legal defence costs incurred following an Income Tax assessment could be classified as capital losses. The Directorate General for Taxes (DGT) ruled that such expenses are considered consumption expenditure and are therefore not deductible.
This ruling clarifies that costs associated with legal representation in tax disputes do not qualify as capital losses, preventing taxpayers from reducing their taxable base through these expenses.
The tax team reviews your specific situation.
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