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A taxpayer inquired whether compensation received following the judicial rescission of a land sale agreement constitutes general income or savings income. The Directorate General for Taxes (DGT) ruled that, as it does not arise from the transfer of assets, it must be included in the general tax base.
This ruling clarifies that compensation for the cancellation of a sale, which is not a direct transfer of assets, is subject to general income tax rates rather than the preferential savings tax rates.
The tax team reviews your specific situation.
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